UNITED STATES
                        SECURITIES AND EXCHANGE COMMISSION
                               Washington, D.C. 20549

                                   FORM 10-KSB/A
                                 (Amendment No. 1)

|X|   ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934

                   For the fiscal year ended December 31, 2006
                                     or

|_|   TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
      OF 1934

             For the transition period from _____________ to ___________

                     Commission file number:      0-49852

                                  DAHUA INC.
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                  (Name of small business issuer in its charter)

                  Delaware                             04-3616479
-----------------------------------------   -----------------------------------
(State or other jurisdiction of           (I.R.S. Employer Identification No.)
     incorporation or organization)

19th Floor, Building C, Tianchuangshiyuan, Huizhongbeili
              Chaoyang District, Beijing, China              100012
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      (Address of principal executive offices)              (Zip Code)

Issuer's telephone number:                                86-10-6480-1527
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Securities registered under Section 12(b) of the Exchange Act:         None
-------------------------------------------------------------------------------

Securities registered under Section 12(g) of the Exchange Act:

                      Common Stock, Par Value $0.001 Per Share
-------------------------------------------------------------------------------

Check whether the issuer is not required to file reports pursuant to Section 13
or 15(d) of the Exchange Act. |__|

Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.  Yes |X|   No |__|

Check if there is no disclosure of delinquent filers pursuant to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB.   |__|

Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act).   Yes |__| No |X|

Registrant's revenues for the year ended December 31, 2006 were $11,800,257.

The aggregate market value of the voting and non-voting common equity held by
non-affiliates computed by reference to the price at which the common equity was
sold, or the average bid and asked price of such common equity as of a specified
date within the past 60 days: Since there is no trading market for Registrant's
securities, no estimate as to the market value can be given.

The number of shares outstanding of Registrant's common stock as of August 30,
2007 was 25,000,000.

Transitional Small Business Disclosure Format (Check one): Yes |__| No |X|








                                      DAHUA INC.


                                     FORM 10-KSB
                          For the Year Ended December 31, 2006



PART I

Item 1.   Description of Business......................................        4
Item 2.   Description of Property......................................       13
Item 3.   Legal Proceedings............................................       14
Item 4.   Submission of Matters to a Vote of Security Holders..........       14

PART II

Item 5.   Market for Common Equity and Related Stockholder Matters.....       14
Item 6.   Management's Discussion and Analysis or Plan of Operation....       15
Item 7.   Financial Statements.........................................       27
Item 8.   Changes In and Disagreements with Accountants on Accounting
           and Financial Disclosure....................................       40
Item 8A.  Controls and Procedures......................................       41
Item 8B.  Other Information............................................       42

PART III

Item 9.   Directors, Executive Officers, Promoters and Control Persons;
           Compliance with Section 16(a) of the Exchange Act...........       42
Item 10.  Executive Compensation.......................................       44
Item 11.  Security Ownership of Certain Beneficial Owners and Management
           and Related Stockholder Matters.............................       46
Item 12   Certain Relationships and Related Transactions...............       47
Item 13.  Exhibits.....................................................       49
Item 14   Principal Accountant Fees and Services.......................       51

Signatures






Item 1.   Description of Business


Background
----------

Dahua Inc. (the "Company") was incorporated on March 8, 2002, in the State of
Delaware under the name of Norton Industries Corp. ("Norton") as a blank check
company for the purpose of either merging with or acquiring an operating company
with operating history and assets. In June 2002, the Company filed a
registration statement on Form 10-SB with the Securities and Exchange Commission
("SEC") in order to become a Section 12(g) registered company under the
Securities Exchange Act of 1934, as amended. The registration statement became
effective on or about August 10, 2002.

From March 8, 2002, to January 30, 2005, Norton conducted virtually no business
other than organizational matters and filings of periodic reports with the SEC
pursuant to the reporting requirements of Securities Exchange Act of 1934, as
amended. The promoters, control persons and affiliates of Norton were
Mr. Jianjun Zhang, Waywood Investments Ltd. ("Waywood"), Comp Hotel
International Ltd. ("Comp Hotel"), and South Sea Petroleum Holdings Ltd. ("South
Sea Petroleum"). Waywood is a small business consulting firm organized in the
British Virgin Islands. Mr. Jianjun Zhang is the sole shareholder of Waywood.
From Norton's inception in March 2002, to February 2003, Waywood owned 100% of
Norton, and Mr. Jianjun Zhang, from March 2002 to January 2005, was the sole
director and officer of Norton. On February 26, 2003, Waywood sold 85%, or
4,250,000 shares, of Norton's capital shares to Comp Hotel for $42,500 in cash.
Comp Hotel is a travel-related service provider operating in Hong Kong, and is
controlled by South Sea Petroleum, a Hong Kong corporation, whose principal
business is the exploration and production of crude oil in Indonesia.

On January 30, 2005, Waywood and Comp Hotel entered into a Share Exchange
Agreement with Bauer Invest Inc. for a reverse acquisition. Pursuant to the
agreement, Waywood and Comp Hotel sold all of their capital stock, or 5,000,000
shares of common stock, to Bauer for retirement in exchange for $100,000 in cash
and 5%, or 1,000,000 shares of Norton's post-merger common stock. To effectuate
the reverse acquisition, Norton issued 19,000,000 shares of its common shares
to 108 shareholders of Bauer in exchange for 100% of shares in Bauer on a pro
rata basis, i.e. the number of shares received by each shareholder is
proportionate to the number of shares he/she had originally owned in Bauer.
Following the transaction, on February 7, 2005, the name of Norton was changed
to Dahua Inc.

Bauer is a holding company, which conducts its business through its 80% owned
subsidiary Beijing Dahua Real Estate Development, Ltd., an operating company
organized in the People's Republic of China ("Dahua Real Estate"). As a result
of the reverse acquisition, Bauer became our wholly owned subsidiary, and the
shareholders of Bauer became our controlling shareholders. This transaction was
accounted for as a recapitalization, rather than a business combination. Under
accounting principles generally accepted in the United States of America, after
completion of this transaction, the Company files prior historical financial
information of Bauer and its subsidiaries for the years prior to the acquisition
on a stand-alone basis. The continuing operations of the Company will reflect
the consolidated operations of Dahua and its subsidiaries.

On May 12, 2005, Dahua Real Estate increased its registered capital, in which
the company increased its investment in Dahua Real Estate by $2,265,600 and the
minority shareholder of Dahua Real Estate increased its investment by $566,265.
Dahua Project Management Group ("Dahua Group") advanced the Company funds to
allow for the increase in investment, which amount was recorded as short-term
loans-related parties. On September 21, 2005, the Company issued, on a pro rata
basis, an aggregate of 4,750,000 shares of its common stock to shareholders of
Dahua Group in exchange for the conversion of the short-term loan ($2,265,600)
to equity shares. In connection with issuance of additional shares, pursuant to
a no-dilution clause of the Share Exchange Agreement dated January 30, 2005 the
Company entered into with Comp Hotel and Waywood, on September 21, 2005, the
Company issued 212,500 and 37,500 shares of our common stock to Comp Hotel and
Waywood, respectively.

Bauer was incorporated on December 10, 2003, under the laws of the British
Virgin Islands. On May 25, 2004, the shareholders of Dahua Group transferred to
Bauer 80% of the capital stock of Dahua Real Estate in exchange for all the
capital stock of Bauer. Dahua Group is a Beijing Municipal Government licensed
construction project supervising business entity in Beijing, China. This
transaction was accounted for as a recapitalization of Dahua Real Estate, rather
than a business combination. Before the stock transfer, the shareholders of
Dahua Group owned 80% of capital stock of Dahua Real Estate, and Beijing Dahua
Bidding Agency owned the remaining 20%. Beijing Dahua Bidding Agency is a
Chinese corporation servicing construction companies in biddings for major
construction projects. After the transfer, the shareholders of Bauer replaced
the shareholders of Dahua Group as holder of 80% of the capital stock of Dahua
Real Estate, while Beijing Dahua Bidding Agency still owns the remaining 20%.
Both Bauer and Dahua Group were owned by the same group of shareholders in the
same proportions prior to the acquisition by Norton.

Prior to the acquisition, other than owning 80% of Dahua Real Estate's capital
stock, Bauer had no operations. Dahua Real Estate was incorporated in China on
September 24, 2001, to engage in the development, construction, and sale of
luxury single-family housing units. Both Norton and Bauer were non-operating
shell companies and incurred minimal costs to acquire Bauer or Dahua Real
Estate, and therefore there was no need for adjustments for any costs incurred
by Norton or Bauer to be "pushed down" in the accounts of Norton, Bauer or Dahua
Real Estate. Dahua Real Estate did not incur any other costs which were required
to be "pushed down" for the completion of the transaction.

The promoters, control persons and affiliates of Bauer Invest, Inc. and Dahua
Real Estate are Mr. Yonglin Du and Dahua Group. Prior to the acquisition, a
group of shareholders owned 100% of Dahua Group, and the same group of the
shareholders owned 100% of Bauer in the same shareholding proportion as they
owned Dahua Group. At present, the same group of shareholders own 95% of Dahua
Inc. Yonglin Du, our CEO and President, also acts as president of Dahua Group
and Bauer. In 2000, Mr. Du founded Dahua Group and has since been its Chairman
of the Board of Directors and Chief Executive Officer. Dahua Group is a Beijing
Municipal Government licensed construction project supervising business entity
which is operating in Beijing, China. Since January 30, 2005, Mr. Du has been
our Chairman of the Board of Directors and Chief Executive Officer.

The Company has not been involved in any bankruptcy, receivership or similar
proceedings.


BUSINESS
--------

The Company, through its 80% owned subsidiary Beijing Dahua Real Estate
Development Ltd. ("Dahua Real Estate"), engages in the business of development,
construction and sale of luxury single-family homes in the northern suburb of
Beijing, China.


Development Projects
--------------------

In July 2003, the Company began to develop its first real estate project. The
project is called the first phase of Dahua Garden (the "First Phase"), which
consists of 76 luxury residential housing units, all of which are single houses
ranging from approximately 2,000 to 5,000 square feet, each with 3-4 bedrooms
with built-in closets and adjacent bathrooms, an open eat-in kitchen, a family
room, a living room, and an attic solarium for indoor sun bathing. Those homes
are within reasonable driving distances from Beijing metropolitan areas. The
project is located at the northern skirt of Beijing, China. The property being
developed sits on a hot spring, spewing 10,000 cubic meters per day providing
every house with hot spring water for baths. The water temperature at the mouth
of the hot spring is over 60 degrees centigrade. The surplus hot spring water is
discharged into the surrounding creeks and ponds, making them unfrozen all year
round.

The average sales price is around 1,500 yuan (approximately $188) per square
foot. The price does not include interior finishing, light fixtures, plumbing
and appliances, which are custom tailored to suit individual tastes and
preferences of the buyer from a menu of options. The average cost for interior
finishing is approximately 200 yuan (approximately $25) per square foot. The
interior finishing can be done by outside contractors of the buyer's choice.

The First Phase is constructed on land licensed from the government of China for
a period of 70 years, which expires on April 27, 2073. The granting of land use
licenses is a common practice in China as all land is government-owned, and, at
present, no option to purchase land has ever been granted. Pursuant to the laws
of China, all land belongs to the government. Regardless of whether real estate
is purchased or sold for residential or business purposes, the purchaser will
receive the ownership license and a permit to only use the land, as opposed to
owning the land. Upon transfer of title of the units to the owners, we will not
have any interest in such units or licensed land.

The construction began in July 2003 and was completed in December 2005. As of
December 31, 2006, 30 units were sold and 30 units were reserved with deposits.
There were 16 units available for sale.

We are currently in the process of applying with Beijing municipal and Changping
district government agencies for the requisite licenses, permits, and approvals
in order to start our Second Phase of Dahua Garden, which will include 250 units
of luxury single-family houses located in Changping District, Beijing, China, on
an approximately 267,000 square-meter site with a community clubhouse, creeks,
ponds, and professionally manicured gardens and landscape. Each will be 3,000 to
5,000 square feet in size to be sold for 4.5 to 6 million yuan, or approximately
$550,000 to $720,000. We will serve as the sole developer of the project,
including construction and sales.

In August 2006, Chinese government issued a number of new rules and regulations
for real estate developers, like us, in an attempt to push down rising house
prices by cutting down luxury single family house constructions and favoring
construction of apartment buildings. Under the government's new policy, (i) no
single family houses can be built, if the construction has not started, without
special construction permits; (ii) All permits previously issued have to be
re-reviewed and re-approved; and (iii) the land previously acquired for luxury
housing construction have to be revalued and sold to the people who offer the
most money for the land in an auction. Because of those new government policies,
we have incurred a long delay for obtaining the consents and approvals to
commence our construction for the second phase of Dahua Garden. On May 9, 2007,
we contacted a Beijing Municipal Government agency, who is responsible for the
issuance of construction permits, for our construction approval time frame
guidance. We were told two weeks later that our construction permit is very
much likely to be issued for two reasons: (1) We have completed our First Phase
of Dahua Garden; and (2) We have acquired for this land for almost ten (10)
years. It is expected that we may obtain our construction approvals by the
middle of 2008.

However, there is no assurance that we will obtain those consents and approvals
from the government. If no consents and approvals are obtained, we may have to
cease our Second Phase of single luxury family house operations, and change our
business plan to build apartment buildings. As of the date of this report, we
don't have any current plans or arrangements for development of apartment
buildings.

Home Construction
-----------------

We act as the general contractor for our residential home developments and hire
subcontractors for all construction activities. The use of subcontractors
enables us to reduce our investment in direct labor costs, equipment and
facilities. We generally price our housing only after we have entered into
construction contracts with subcontractors, an approach which improves our
ability to estimate costs accurately.

As the general contractor, we select our subcontractors for construction through
a competitive bidding process. In addition to the bid price, our criteria
include the bidders' experience, reputation, recommendations and references from
other developers. The construction prices are capped and cover all materials
and labor needed to complete the construction under the construction contract.
The bid-winning subcontractor will make advance payments for all materials and
labor. We make payments to the subcontractors over time upon completion and
acceptance of certain phases of construction according to agreed-upon
milestones specified in the construction contract.

Our competitive bidding process includes the following steps: (1) Bid invitation
registration, (2) Bid invitation announcement, (3) Bid submission, (4)
Pre-screening of bidders' qualifications, (5) Purchase of bid document package
by the pre-qualified bidders, (6) Opening bids, (7) Assessment of bids, (8)
Selection and determination of the winning bidder, (9) Notice of award, and
(10) Execution of the construction contract.

To assure quality, construction has been monitored by Beijing Aocheng
Construction Management Ltd. ("Aocheng") and by construction quality control
authorities under the Changping District government. Aocheng is not a related
party. We entered into an agreement with Aocheng on September 24, 2003. The
agreement covered a period from October 15, 2003 to June 20, 2004. The total
management fee was 333,860 yuan, or approximately $40,000, paid in four
installments: (1) 10% within 10 days after the management company staff enters
the construction site; (2) 60% within one week after the roof of the main
building structure is completed; (3) 25% within 14 days after examination and
acceptance of construction; and (4) 5% on the first anniversary of acceptance
of construction. Although the contract has expired, according to Chinese law,
the company in charge of quality control of a construction product bears life-
long responsibility for the quality of such construction. Thus, Aocheng shall
remain responsible for quality assurance of our construction.

As the general contractor, we are responsible for all planning, scheduling and
budgeting operations. There is an on-site superintendent who oversees the
subcontractors. We supervise the construction of our project, coordinate the
activities of subcontractors and suppliers, subject their work to quality and
cost controls and assure compliance with zoning and building codes.

Subcontractors typically are retained on a project-by-project basis to
complete construction at a fixed price. Agreements with our subcontractors are
generally entered into after competitive bidding on an individual basis. We
generally obtain information from prospective subcontractors and suppliers with
respect to their financial conditions and abilities to perform under their
agreements prior to commencement of a formal bidding process. The services
performed for us by subcontractors are generally readily available from a number
of qualified subcontractors.

We use, to the extent feasible, standardized materials in our commercial
construction and homebuilding operations in order to permit efficiencies in
construction and material purchasing that can result in higher margins. Our
subcontractors generally negotiate the purchase of major raw material components
such as concrete, lumber and structural steel. They are responsible for what
they purchase and for what they pay for. Raw materials used in our operations
are generally readily available from a number of sources but prices of such raw
materials may fluctuate due to various factors, including supply and demand.

As the general contractor, we are not subject to any bonding and/or insurance
requirements under Chinese law and common practice in housing construction. We
may suffer heavy or total losses in the event of fire, earthquake or other
disasters.

To date, we have not encountered any problems that would affect the delivery
date of our First Phase units, nor have we experienced a significant increase
in prices of materials.

The First Phase is subject to government inspections prior to transfer of title
to buyers. The purpose of the inspection is to ensure that real estate
developers adhere to government standards of quality and safety.

Other Government regulations that we must adhere to are:

   o   Any structures being constructed must be for residential and commercial
use;

   o   All structures must be within certain dimensions;

   o   Public infrastructures must be in place, such as electrical and telephone
poles, underground pipe systems;

   o   There must be various safety access routes in case of emergencies such
as fire or earthquake;

   o   Construction must not violate environmental laws in effect; and

   o   Compliance with certain infrastructure standards.

To date we have not violated any of the above-noted regulations.

We typically obtain all necessary development approvals, complete a satisfactory
environmental assessment of the site, secure any necessary financing and
complete other due diligence deemed appropriate by us prior to becoming
obligated to commence the construction.


Acquisition of Land-Use Rights
------------------------------

The residential home development process in China generally consists of three
phases: (1) acquisition of land-use rights; (2) land development and
construction; and (3) sale. The development cycles vary depending on the extent
of the government approvals required, the size of the development, necessary
site preparation, weather conditions and marketing results.

The whole development process for our First Phase is set forth below.

The date enclosed in the parenthesis following each step indicates the date on
which such approval was granted.

   1.  Signing of a land use rights transfer agreement with the owner of such
rights, i.e. Lutuan Village Committee of Beiqijia County, Changping District,
Beijing. Said agreement was then submitted to the Beiqijia County Government for
approval (September 25, 2001).

   2.  Preparation of a 'Proposal of the First Phase of Dahua Low Density
Residential Development Subdivision, which, after approval by Beiqijia County
Government and Changping District Government, was submitted to the Development
and Reconstruction Commission of Beijing Municipal Government for approval
(2001).

   3.  Approval of the Proposal by the Development and Reconstruction
Commission of Beijing Municipal Government after consultation with Beijing
Construction Commission and Planning Commission (June 12, 2002).

   4.  Submission of the Proposal by the Land Resources Bureau of Changping
District to Beijing National Land Resources Bureau to apply for changing the
nature of the proposed construction site from collective-owned land to state-
owned land (November 8, 2002).

   5.  Signing of a "Land Use Rights Transfer Agreement" with Beijing National
Land Resources Bureau and Beijing Housing Administration, making payment of land
use fee, and obtaining the 'National Land Use Permit' (October 20, 2003).

   6.  Submission of a detailed development plan to Beijing Planning Commission
to obtain "Development Planning Permit" and "Development Construction Permit"
(September 4, 2003 and September 28, 2003).

   7.  Upon issuance of the four Permits as set forth above, submission of an
application to Beijing National Land Resource Bureau and Beijing Housing
Administration for the "Residential Housing Pre-sale Permit" (November 2003 and
June 2, 2004).

The above-mentioned Permits are needed for all real estate development projects
in Beijing. Upon issuance of the "Residential Housing Pre-sales Permit", we may
begin to sell housing units to the public. After signing a purchase agreement
with the buyer, the agreement is recorded at the National Land Resource Bureau
and Housing Administration of Changping District, Beijing.


Sales and Marketing
-------------------

Our sales and marketing activities are conducted principally through our sales
employees. They are paid by base salary, plus sales commission, which is 0.3%
of gross sales. We have no single customer that will account for any substantial
portion of our sales revenues.

Our residential homes are targeted toward buyers who desire high quality
property with many attractive features on which to build luxury homes for use
as their primary residences, vacation retreats, retirement residences, or
investments. Our target buyers include upper and middle class Chinese citizens
and foreign nationals working in Beijing and the surrounding area, such as
Shanxi and Hebei provinces, ranging from 30 to 60 years of age, including
private entrepreneurs, senior executives, technology elites, college professors
and self-employed professionals. The foreign nationals are expatriates of
foreign companies based in China. Our strategy for remaining competitive in
this market involves building on our reputation of offering quality homes;
using our own sales offices and personnel; and offering properties with many
appealing features, such as trails, water access, creeks, and attractive views.

We sell our homes through our sales representatives who typically work from
sales offices located in the model homes at the development site. Sales
representatives assist potential buyers by providing them with basic floor
plans, price information, development and construction timetables, preview of
model homes and the selection of options. Our sales representatives are trained
by us and generally have had prior experience selling new homes in the local
market. We also market our homes for sale through direct mailing to an
identified population of prospective buyers and, to a lesser extent, through
other media, including newspapers, television and radio advertising, airplane
advertising, product tie-ins, billboards and other signage. For the years ended
December 31, 2006 and 2005, our advertising expenses were $1,824,182 and
$98,970, respectively.

Homes are sometimes sold prior to or during construction using sales contracts
which are accompanied by cash deposits. After receiving the Residential Housing
Pre-sale Permit issued by the government, we, the developer, are permitted by
government authorities to sell the residential units to be built to the public,
which is common practice in China. Upon execution of a binding purchase contract
between the developer and the buyer, a deposit, ranging from 10% to 20% of the
sales price, is required to be made to the developer, which we use to construct
our residential units. As of December 31, 2006, the balance of our customer
deposits was $9,576,401.

Our sales are made pursuant to a standard sales contract. Subject to particular
contract provisions, we generally permit purchasers to cancel their contractual
obligations in the event mortgage approvals are unobtainable within a specified
period of time and under certain other circumstances, including rescission
rights which may be given under local law. Accordingly, there is a possibility
that home buyers, even though they have put down a certain amount of deposit,
turn out choosing not to purchase our housing units which creats an uncertainty
and risk to our results of operations. To date we have two contracts that have
been cancelled.

To assist in the marketing of our homes and to limit our liability for certain
construction defects, we sell our homes subject to a limited warranty that is
provided by our subcontractors. We don't provide any kind of warranty to
homebuyers. Our subcontractors are responsible for the cost to repair major
structural defects, roofing, internal walls, heating, tiling problems, if any,
for a certain period of time, from one to five years. The foregoing repair costs
are limited by our subcontractors' policy to the repair, replacement or payment
of the reasonable cost of repair or replacement of such warranted items not to
exceed an aggregate amount equal to the final sales price of the home covered
by the warranty. Once all homes have been constructed and sold, we do not have
any post-sale obligations.


Home Buyer Financing and Deed Application
-----------------------------------------

We do not provide financing to prospective homebuyers. Approximately 25% of
homebuyers in China currently use their savings or funds from their relatives to
pay for the houses they buy. We are permitted to sell our homes before they are
built. It usually takes 18 to 20 months from ground breaking to completion,
within which the homebuyers make installment payments to the developer. At the
time of completion and delivery, the purchase price will have been paid in full.
After viewing the model units, the potential buyer usually leaves 30,000 yuan,
or $3,841, refundable deposit, upon receipt of which we will hold the unit for
that buyer. The potential buyer may withdraw the commitment within two weeks
and receive a full refund of said deposit. The parties may also enter into a
binding contract, and the buyer is required to make a 10% to 20% down payment
at the time of signing. Thereafter, the buyer makes installment payments every
2 to 3 months until the purchase price is paid in full. The actual payment
terms vary on a case-by-case basis depending on negotiations.

The majority of homebuyers in China need to finance their homes with mortgage
loans from banks. To facilitate their mortgage application, most developers in
China, including us, are involved in the buyers' mortgage application process.
We first initiate negotiations with two banks to obtain a blanket lending
commitment which covers all potential buyers for the homes to be built by us.
If a potential buyer needs financing, we conduct a preliminary screening of
the buyer's creditworthiness. Then we forward the mortgage applications to the
banks for further processing, which usually take 30 to 60 days. Upon approval
of the mortgage extended to each buyer by the banks, the loan proceeds are
transferred directly to our bank account, rather than the buyer's. We have not,
and will not receive any finder's fees or referral fees from the banks.

It is customary in China that developers may, depending on the type of property,
use up to 95% of the loan proceeds so obtained to meet their working capital
needs. The banks require that 5% to 20% of the proceeds be set aside. On our
balance sheets, such loan proceeds are treated as customer deposits. We have
not taken any measure to safeguard customer deposits because currently Chinese
law does not require that such deposits be placed in an escrow or trust account
for safeguarding purpose.

The life of a mortgage loan in China can be up to 30 years. Because our Dahua
Garden project is considered luxury housing, the maximum life of mortgage loans
is 20 years. The mortgage rates, which are flexible in nature, are dictated by
the Chinese central government based on prime commercial lending rates from
time to time. Due to competition among lending institutions, mortgage rates can
be adjusted downward by up to 10%. The mortgage rates currently range from
5.51% to 6.12%, which are applied to primary residence and second home,
respectively.

Unlike the United States, deeds for newly-built homes in China are applied for
by the developer with the government, which owns the land. Upon issuance of the
deeds, the developer distributes the deeds to individual homeowners. In order
to obtain government approval of deeds, the developer must have obtained all
requisite permits and licenses and paid all fees and taxes. Before the actual
issuance of deeds, the ownership of the real property remains with the developer
even if the homes have already been sold. Generally, the developer will wait
until all homes are completed to apply for the deeds in a blanket application,
which takes approximately 40 to 60 days. Before the issuance of deeds, the
title to the homes legally remains with the developer.


Regulation
----------

Real estate development is a highly regulated industry in China, and we are
subject to extensive local, district, municipal and national rules and
regulations regarding permitting, zoning, subdivision, utilities and water
quality. Regulation is carried on by municipal, district, and national
authorities, of which the municipal and district governments have the greatest
regulatory impact. The City of Beijing, in which we operate, has been adopting
increasingly restrictive regulations associated with development activities,
including the adoption of more restrictive ordinances, greater emphasis on
land use planning, pressure to increase the number of low density residential
developments, and heightened public concern aimed at limiting development as
a means to control growth. Such regulation may delay development of our
properties and result in higher developmental and administrative costs.

To engage in the business of real estate development and sale of residential
units in Beijing, China, certain government approval is required. We have
obtained all necessary licenses and permits, which include (i) State-Owned Land
Using License issued by Beijing Land Resources and Residential Housing
Management Bureau; (ii) Constructive Lands Planning License issued by Beijing
Planning Committee; (iii) Constructive Project Construction License issued by
Beijing Construction Committee; (iv) Constructive Project Planning License
issued by Beijing Planning Committee; and (v) Commercial Residential House
Pre-Sales License issued by Beijing Land Resources Bureau and Building
Management Bureau.

To date, we are in material compliance with these laws and regulations.


Environmental Matters
---------------------

We are subject to China's national and local environmental protection laws.
These laws could hold us liable for the costs of removal and remedy of certain
hazardous substances or wastes released on our property regardless of whether
we were responsible for the presence of hazardous substances. The presence of
hazardous substances, or the failure to properly remedy them, may have a
material adverse effect on our results of operations and financial condition.
As of the date of this prospectus, we are not aware of any material
noncompliance, liability or claim relating to hazardous or toxic substances in
connection with our property and operations. To date, we have not incurred any
costs in complying with environmental laws and regulations. We believe that we
are in material compliance with these laws and regulations.


Patents and Trademarks
----------------------

We do not own any patents or trademarks.


Product Research and Development
--------------------------------

To date we have not conducted any product research and development. We do not
plan to conduct any product research and development activities in the next
twelve months.


Employees
---------

As of December 31, 2006, we had 22 full-time employees. We expect that there
will be no significant changes in the number of employees in the coming twelve
months. None of our employees is represented by trade unions. We consider our
employee relations to be satisfactory.



Item 2.   Description of Property



We do not own any real estate properties other than the residential units we
develop for sale.  Our executive offices are located in an office complex of
approximately 2,000 square feet at 19th Floor, Building C, Tianchuangshiyuan,
Huizhongbeili, Chaoyang District, Beijing, China, 100012. This office space is
provided by Beijing Guohong Dahua Economic Research Center, a member of the
Dahua Group. We have contracted with Beijing Guohong Dahua Economic Research
Center to provide administrative and management services. Included in those
services are the payment of officer salaries and provision of office space and
other shared costs and services. We accrued $74,349 for the year ended
December 31, 2005, into short- term loans due to related parties for payment of
the services, which was still accrued at December 31, 2006. We believe that
these facilities are adequate for our current and anticipated needs.


Investment Policies
-------------------

At present we have no established policy with respect to investments on real
estate or interests in real estate. However, we intend that substantially all
of our investments will be residential luxurious single-family houses. The
purpose of such investments will primarily be generating sales revenues. There
are no limitations on the percentage of assets which may be invested in any one
investment or type of investment. Our Board of Directors may set such policy
without a vote of our shareholders. We will not invest in real estate
mortgages, and we will not invest in securities of or interests in real estate
investment trusts, partnership interests, or other persons primarily engaged
in real estate activities.

We do not plan to limit the geographical area in which we may invest, but we
expect that all of our investments will be made in metropolitan Beijing, China.
We have no current plans to form a joint venture or other arrangements with
third parties to engage in real estate development.

We may finance our investments through both public and private secured and
unsecured debt offerings, as well as public and private placements of our equity
securities. The equity securities may include both common and preferred equity
issues. There are currently no restrictions on the amount of debt that we may
incur. Since inception, our operating activities have been mainly financed by
equity capital, an unsecured line of credit provided by Dahua Group, our
affiliate, and purchaser deposits received from our pre-sale of the First Phase
units of Dahua Garden.


Description of Real Estate and Operating Data
---------------------------------------------

Our only real estate project currently being developed is the First Phase of
Dahua Garden, which is located in the northern suburban areas of Beijing, China,
approximately 20 kilometers from the downtown of Beijing. It consists of 76
luxurious residential units, each ranging from 2,000 to 5,000 square feet in
size with 3 to 4 bedrooms. The residential units are constructed on a piece of
land of approximately 30 acres. The construction of all of the units has been
completed and they are being sold to the public. As the developer, we do not
have title to the land, the use of which is licensed from the Chinese government
for a period of 70 years expiring on April 27, 2073, but we own all the
residential units constructed thereon until such units are sold. There are no
material mortgages, liens or other encumbrances against the land or residential
units. Upon conveyance of title to the residential units to the buyer, the land
use rights will be passed to the buyer.

The Second Phase of Dahua Garden development includes 250 homes located on a
267,000 square meter site with community clubhouse, creeks, ponds, and
professionally manicured gardens and landscape. We are currently applying with
the Beijing municipal and local governmental authorities for all the requisite
licenses, permits, and approvals.



Item 3.   Legal Proceedings


There are no legal actions pending against us nor are any legal actions
contemplated by us.



Item 4.   Submission of Matters to a Vote of Security Holders


No matters were submitted to a vote of security holders during the fourth
quarter ended December 31, 2006.



                                   PART II



Item 5.   Market for Common Equity and Related Stockholder Matters


Market Information
------------------

There is no public trading market for our common stock.


Holders
-------

As of  August 30, 2007, there were 110 holders of record for our common shares.
We have only one class of stock outstanding.


Stock Options, Warrants and Convertible Securities
--------------------------------------------------

We have not granted any stock options or warrants to purchase shares of our
common stock, and we have not issued and do not have any securities outstanding
that may be converted into our common shares or have any rights convertible or
exchangeable into shares of our common stock.


Dividends
---------

We have not paid any dividends since our incorporation and do not anticipate
paying dividends in the foreseeable future. We intend to retain future earnings,
if any, to fund the expansion and growth of our business.

There are no restrictions in our Articles of Incorporation or Bylaws that
prevent us from declaring dividends. The Delaware Revised Statutes, however, do
prohibit us from declaring dividends, after giving effect to the distribution
of the dividend if: (i) we would not be able to pay our debts as they become
due in the usual course of business; or (ii) our total assets would be less
than the sum of our total liabilities plus the amount that would be needed to
satisfy the rights of shareholders who have preferential rights superior to
those receiving the distribution.


Securities Authorized for Issuance under Equity Compensation Plans
------------------------------------------------------------------

We do not have any compensation plan under which equity securities are
authorized for issuance.


Rule 144 Shares
---------------

As of August 30, 2007, there were 25,000,000 shares of common stock issued and
outstanding, all of which are "restricted securities", as that term is defined
under Rule 144 of the Securities Act of 1933. Under Rule 144, such shares can
be publicly sold, subject to volume restrictions and certain restrictions on
the manner of sale, commencing one year after their acquisition, except the
shares held by Waywood Investments Ltd. (150,000 shares) and Comp Hotel
International Ltd (850,000 shares). The SEC is of the opinion that Rule 144 is
not available for resale transactions for securities issued by a blank check
company, like Norton, and, consequently, the resale of such securities cannot
occur without registration under the Securities Act. Furthermore, promoters and
affiliates of a blank check company and their transferees would be considered
"underwriters" under the Securities Act when reselling the securities of a
blank check company. The SEC also states that these securities can only be
resold through a registered offering. Rule 144 would not be available for
those resale transactions despite technical compliance with the requirements
of Rule 144.

A total of 19,000,000 shares were issued on January 30, 2005, to 108
shareholders of Bauer Invest Inc. on a pro rata basis. The number of shares
received by each person is proportionate to the number of shares he/she
originally owned in Bauer. The above-mentioned shares were issued pursuant to
Regulation S of the Securities Act of 1933, as amended. These shares can be sold
under Rule 144 resale restrictions.

In general, under Rule 144 as currently in effect, any of our affiliates and
any person or persons whose sales are aggregated who has beneficially owned his
or her restricted shares for at least one year, may be entitled to sell in the
open market within any three-month period a number of shares of common stock
that does not exceed the greater of (i) 1% of the then outstanding shares of
our common stock, or (ii) the average weekly trading volume in the common stock
during the four calendar weeks preceding such sale. Sales under Rule 144 are
also affected by limitations on manner of sale, notice requirements, and
availability of current public information about us. Non-affiliates who have
held their restricted shares for one year may be entitled to sell their shares
under Rule 144 without regard to any of the above limitations, provided they
have not been affiliates for the three months preceding such sale.



Item 6.   Management's Discussion and Analysis or Plan of Operation


We were incorporated on March 8, 2002 in the State of Delaware under the name of
Norton Industries Corp. ("Norton") as a blank check company for the purpose of
either merging with or acquiring an operating company with operating history and
assets. From March 8, 2002 to January 30, 2005, Norton had conducted virtually
no business other than organizational matters and the filings of periodic
reports with the SEC pursuant to the reporting requirements of the Securities
Exchange Act of 1934, as amended.

On January 30, 2005, Norton entered into a share exchange agreement, by which
Norton acquired all of the capital shares of Bauer Invest Inc. Bauer is a
holding company, which conducts its business through its 80% owned subsidiary
Beijing Dahua Real Estate Development, Ltd., an operating company organized in
China ("Dahua Real Estate"). As a result of this transaction, Bauer became our
wholly owned subsidiary. This transaction was accounted for as a
recapitalization, rather than a business combination. Under accounting
principles generally accepted in the United States of America, after completion
of this transaction, we filed prior historical financial information of Bauer
and its subsidiaries, on a stand-alone basis, for two years prior to the
acquisition. Our continuing operations will reflect the consolidated operations
of Dahua and its subsidiaries.

We, through our subsidiary Beijing Dahua Real Estate Development Ltd., are
engaged in the business of development, construction and sale of luxury
residential single-family homes in Beijing, China. In July 2003, we began to
develop our first real estate project, Dahua Garden (the "First Phase"), which
consists of 76 luxury residential units, all of which are single-family houses
ranging from approximately 2,000 to 5,000 square feet, each with 3 - 4 bedrooms.
The construction site is located at the northern skirt of Beijing, China. The
construction began in July 2003 and was completed in December 2005. As of
December 31, 2006, 30 units were sold, 30 units were reserved with clients'
deposits, and 16 units were available for sale.


Plan of Operations
------------------

For the next 12 months, we plan to do the following.

   (1)  As of December 31, 2006, we have sold 30 units and reserved 30 units
with deposits. For the next 12 months, we will continue to sell the remaining
16 units to the public. At present, we don't know when they can be sold out.
There is no significant amount of budget required.

   (2)  We are currently in the process of applying with Beijing municipal and
Changping district government agencies for the requisite licenses, permits, and
approvals in order to start the Second Phase of Dahua Garden, which will include
250 units of luxury single-family houses located in Changping District, Beijing,
China, on an approximately 267,000 square-meter site with a community clubhouse,
creeks, ponds, and professionally manicured gardens and landscape. Each will be
3,000 to 5,000 square feet in size to be sold for 4.5 to 6 million yuan, or
approximately $550,000 to $720,000. We will serve as the sole developer of the
project, including construction and sales.

In August 2006, Chinese government issued a number of new rules and regulations
for real estate developers, like us, in an attempt to push down rising house
prices by cutting down luxury single family house constructions and favoring
construction of apartment buildings. Under the government's new policy, (i) no
single family houses can be built, if the construction has not started, without
special construction permits; (ii) All permits previously issued have to be
re-reviewed and re-approved; and (iii) the land previously acquired for luxury
housing construction have to be revalued and sold to the people who offer the
most money for the land in an auction. Because of those new government policies,
we have incurred a long delay for obtaining the consents and approvals to
commence our construction for the second phase of Dahua Garden. On May 9, 2007,
we contacted a Beijing Municipal Government agency, who is responsible for the
issuance of construction permits, for our construction approval time frame
guidance. We were told two weeks later that our construction permit is very much
likely to be issued for two reasons: (1) We have completed our First Phase of
Dahua Garden; and (2) We have acquired for this land for almost ten (10) years.
It is expected that we may obtain our construction approvals by the middle of
2008. However, there is no assurance that we will obtain those consents and
approvals from the government. If no consents and approvals are obtained, we may
have to cease our Second Phase of single luxury family house operations, and
change our business plan to build apartment buildings. As of the date of this
report, we don't have any current plans or arrangements for development of
apartment buildings.


Results of Operations
---------------------

Years Ended December 31, 2006 and 2005
--------------------------------------

Revenues
--------

We began our First Phase of Dahua Garden construction, which consists of 76
luxury residential units, in July 2003. The construction was completed in
December 2005. As of December 31, 2006, we have sold 30 units out of 76 units.
We recognized sales revenues of $11,800,257 and $2,267,399 from the sale of our
housing units, for the years ended December 31, 2006 and 2005, respectively.


Cost of Good Sold
-----------------

Cost of good sold consists primarily of land acquisition and development costs,
engineering, infrastructure, capitalized interest, and construction costs. For
the years ended December 31, 2006 and 2005, our cost of good sold was $8,065,164
and $1,530,731 respectively.


Operating Expenses
------------------

For the year ended December 31, 2006, our operating expenses increased by
$2,388,647, or 503.3%, to $2,863,235 from $474,588 in the prior year, mainly
due to the large increase of the advertising expense, which increased
$1,725,212, or 1743.2%. The reason for the large increase of advertising
expenses is that the Company put more on the advertising to make more people
familiar with the project. Accordingly, the sales revenues increased largely
for the year ended December 31, 2006, compared with the year ended December 31,
2005. We made a provision of $180,995 for houses which will be sold below cost.
As of December 31, 2006, we didn't recognize the sales revenues of such houses,
because they didn't meet the requirement of revenue recognition. However, the
sales prices of such houses were predetermined. Since the cost per square meter
increased a little in 2006, it is estimated that the revenues will be lower
than the costs when the revenues are recognized. The payroll expense also
increased $137,882, or 211.5%. Other general and administrative expenses
increased $334,187, or 110.7%.

Other income
------------

During the fourth quarter of 2006, many customers were punished for their delay
payments. The total penalty amounts we received were $90,706. To be differed
from the customer deposits, the penalty amounts were recorded as "other income"
on the financial statements.

Net Income
----------

For the year ended December 31, 2006, we had net income of $395,138, or $0.02
per share, as compared with net income of $137,182, or $0.01 per share, for the
year of 2005.


Liquidity and Capital Resources
-------------------------------

Since inception, our operations have been primarily funded by equity capital,
unsecured short-term loans from Dahua Project Management Group ("Dahua Group"),
our affiliate, and customer deposits that we received from our pre-sale of
housing units.

After receiving the Residential Housing Pre-sale Permit issued by the
government, we are permitted to sell the residential units to be built to the
public, which is common practice in China. Upon execution of a binding purchase
contract between the developer and a homebuyer, a deposit and installment
payments are required to be made to the developer, which we use to construct
our residential housing units. As of December 31, 2006, our customer deposit
balance was $9,576,401.

We also borrow from time to time based on a verbal line of credit agreement from
Dahua Group, our affiliate. There was no written line of credit agreement until
June 20, 2005, to recapture the credit arrangement. The funds so borrowed are
unsecured and there is no upper limit on the amount of money that we can borrow
as long as there are funds available and we need it for our operation. The money
we borrow under this arrangement bears interest at an annual rate of 6%,
repayable within 30 days upon demand by the lender. As of December 31, 2006, the
short-term loans due to related parties had balance of $3,176,699, including
accrued interest of $718,238.

On May 12, 2005, Beijing Dahua Real Estate Development, Ltd, our operating
subsidiary, increased its registered capital, in which Dahua increased its
investment by $2,265,600 and the minority shareholder increased its investment
by $566,265. Dahua Group advanced funds to us to allow for the increase in
investment. On September 21, 2005, we issued 4,750,000 shares to Dahua Group at
the price of $0.477 per share in exchange for the short-term loans Dahua Group
provided. At the same time, according to the Shares Exchange Agreement signed
on January 30, 2005, it is our responsibility to maintain the ownership
percentage held by Comp Hotel International Ltd. ("Comp Hotel") and Waywood
Investments Ltd. ("Waywood"). In this regard, we issued 212,500 shares and
37,500 shares to Comp Hotel and Waywood, respectively. There was no cash inflow
from this issuance. After the capital increase, the subsidiary's registered
capital is $4,036,145, of which we, through Bauer, hold 80% of the shares of
Dahua Real Estate.

As of December 31, 2006, we had cash and cash equivalent balance of $2,338,835.
For the year December 31, 2006, our operating activities provided $5,166,001
of net cash, largely due to decrease in inventories of $1,509,217 and customer
deposits of $3,035,808. For the year ended December 31, 2006, the investing
activities used $270,212 of net cash, mainly due to increase in property, plant
& equipment of $316,551 and partly offset by decrease in loans to related
parties of $46,339. For the same period, the financing activities used
$3,028,524 of net cash, which was due to the payments to related parties.

As of December 31, 2006, our First Phase of Dahua Garden was completed. We are
currently applying with Beijing municipal and Changping district governmental
agencies for all the requisite licenses, permits, and approvals to start our
Second Phase of Dahua Garden. It is estimated that approximately $60.5 million
is needed to complete the Second Phase. In addition to customer deposits, and
short-term loans (line of credit) from Dahua Group, the proceeds generated from
sale of the First Phase will also be used to finance the Second Phase
development. There are no material commitments for capital expenditures.

While there can be no assurance that we will have sufficient funds over the next
twelve months, we believe that funds generated from the sale of our First Phase
of Dahua Garden housing units, purchaser deposits from pre-sale contracts, and
the line of credit provided by our affiliate, Dahua Group, will be adequate to
meet our anticipated operating expenses, capital expenditure and debt
obligations for at least the next twelve months. Nevertheless, our continuing
operating and investing activities may require us to obtain additional sources
of financing. In that case, we may seek financing from institutional investors,
banks, or other sources of financing. There can be no assurance that any
necessary additional financing will be available to us on commercially
reasonable terms, if at all.


Off-balance sheet arrangements
------------------------------

We entered into an agreement with a bank that extended mortgage loans to our
home buyers, whereby we agreed to provide a certain limited guarantee, which
covers the risk before the conveyance of title upon closing. Upon initiating the
loan on behalf of the buyer for the down payment, the bank has withheld a
percentage ranging from 5% to 20% of the loan and deposited such funds into a
segregated account in the bank. At December 31, 2006, the balance of this
separate account was $341,672. Since the Company does not recognize revenue
when its receivables are subject to future subordination, the entire amount that
could become payable to the bank under the limited guarantee is recorded as a
liability on the balance sheet and is included in customer deposits. Please see
Note 6 and Note 7 of Notes to the Financial Statements for details.


Critical Accounting Policies and Estimates
------------------------------------------

Our financial statements have been prepared in accordance with accounting
principles generally accepted in the United States. The preparation of these
financial statements requires us to make estimates and judgments that affect
the reported amounts of assets, liabilities, revenue and expenses, and related
disclosure of contingent assets and liabilities. On an on-going basis, we
evaluate our estimates, which are based on our historical experience and on
various other assumptions that are believed to be reasonable under the
circumstances, the results of which form the basis for making judgments about
the carrying values of assets and liabilities that are not readily apparent
from other sources. Actual results may differ from these estimates under
different assumptions or conditions. We believe that revenue recognition is one
of our more significant judgments and estimates used in the preparation of our
financial statements.


Revenue Recognition
-------------------

The Company recognizes revenue on the sale of a house when the consummation of
a sale is evidenced by: 1) a contractual arrangement that is binding to both
parties; 2) the exchange of all consideration (i.e. the seller has transferred
to the buyer the usual risks and rewards of ownership and the buyer has made
payment in full to the seller); 3) the arrangement of all permanent financing
for which the seller is responsible and; 4) the performance of all conditions
precedent to closing. No revenue is recognized when the Company's receivable is
subject to future subordination, as is the case when the Company guarantees a
bank loan for the period prior to the certification of title transfer.


Inventory Valuation and Related Prepaid Construction Costs
----------------------------------------------------------

The inventories are valued at cost based on the level of completion. No
provision for potential obsolete inventory has been made. Prepaid construction
costs consist of payment to our subcontractors before they provide us services.
Prepaid construction costs were converted into inventory when the subcontractors
finished their work.

At each balance sheet date, we review the carrying amounts of our tangible and
intangible assets to determine whether there is any indication that those assets
have suffered an impairment loss. If any such indication exists, the recoverable
amount of the asset is estimated in order to determine the extent of the
impairment loss (if any). Where it is not possible to estimate the recoverable
amount of an individual asset, the company estimates the recoverable amount of
the cash-generating unit to which the asset belongs.

Recoverable amount is the greater of net selling price and value in use. In
assessing value in use, the estimated future cash flows are discounted to their
present value using a pre-tax discount rate that reflects current market
assessments of the time value of money and the risks specific to the asset.

If the recoverable amount of an asset (or cash-generating units) is estimated to
be less than its carrying amount, the carrying amount of the asset (cash-
generating unit) is reduced to its recoverable amount. An impairment loss is
recognized as an expense immediately.


                                 RISK FACTORS


Investing in shares of our common stock involves a high degree of risk. You
should carefully consider the following risk factors, in addition to the other
information set forth in this report, before you purchase these shares. The
risks and uncertainties described below are those we have identified as
material. If any of the events contemplated by the following discussion of risks
should occur, our business, financial condition and results of operations may
suffer. As a result, the trading price of our common stock could decline and you
could lose part or all of your investment in our common stock.


                            Risks Related to Our Business
                            -----------------------------

WE LACK AN OPERATING HISTORY UPON WHICH AN EVALUATION OF OUR FUTURE SUCCESS OR
FAILURE CAN BE MADE.

We were incorporated in March 2002 as a blank check company for the purpose of
seeking to complete a merger or business acquisition. We conducted virtually no
business until January 30, 2005, when we acquired Bauer Invest Ltd. Bauer is a
holding company, which conducts its business through its 80% owned subsidiary
Beijing Dahua Real Estate Development, Ltd., a private company operating in the
People's Republic of China ("Dahua Real Estate"). Dahua Real Estate was
incorporated on September 24, 2001, to engage in the development and sale of
luxury single-family houses in Beijing, China. The acquisition of Bauer was
accounted for as a recapitalization, rather than a business combination.
Accordingly, the historical operations of Bauer and its subsidiaries were
represented as our historical operations. Our limited operating history makes
it difficult for you to evaluate our business and future prospects.

WE HAVE INCURRED LOSSES IN THE PAST. IF THE LOSSES CONTINUE, WE MAY HAVE TO
SUSPEND OUR OPERATIONS OR CEASE CARRYING ON BUSINESS.

While we had net income of $395,138 for the year ended December 31, 2006, we had
accumulated deficit of $174,998 as of December 31, 2006. We are a development
stage company, and we may incur additional losses. There is no assurance that
our operations will become profitable. Failure to generate revenue will cause us
to go out of business and could cause you to lose all or a substantial part of
your investment.

WE WILL NEED ADDITIONAL FINANCING TO CARRY OUT OUR SECOND PHASE PROJECT. IF WE
ARE UNABLE TO OBTAIN ADDITIONAL FINANCING, WE MAY HAVE TO DELAY THE
IMPLEMENTATION OF OUR SECOND PHASE PROJECT, AND OUR ABILITY TO INCREASE REVENUE
WILL BE MATERIALLY IMPAIRED.

Since inception, we have been dependent on short-term loans and customer
deposits to meet our cash requirements. As of December 31, 2006 we completed the
construction of our First Phase of Dahua Garden project consisting of 76 luxury
single-family houses. Of 76 units, 30 houses were sold, 30 houses were reserved
with clients' deposits, and 16 houses were available for sale. We are currently
applying with Beijing municipal and Changping district governmental agencies
for all the requisite licenses, permits, and approvals to start our Second Phase
of Dahua Garden. To date we have not received any licenses, permits or approvals
from governmental authorities to commence our Second Phase construction. We
expect to obtain the licenses, permits and approvals by the end of 2007. It is
estimated that we need approximately $60.5 million in order to complete our
Second Phase project. We intend to use (i) our proceeds from sales of our First
Phase housing units, (ii) customer deposits from our pre-sale of the housing
units in the Second Phase, and (iii) short-term borrowings from Dahua Group,
our affiliate, to finance our Second Phase of Dahua Garden. At present we do
not have any arrangements for additional financing. If we are unable to obtain
additional financing on terms acceptable to us, we may have to delay or curtail
our Second Phase project, and our ability to increase revenue will be materially
impaired.

IF WE RAISE ADDITIONAL CAPITAL THE VALUE OF YOUR INVESTMENT MAY DECREASE.

If we need to raise additional capital to implement or continue operations, we
will likely issue additional equity or convertible debt securities. If we issue
equity or convertible debt securities, the net tangible book value per share may
decrease, the percentage ownership of our current stockholders may be diluted
and such equity securities may have rights, preferences or privileges senior to
or more advantageous than our common stockholders.

WE NEED PERMITS, LICENSES OR APPROVALS FROM GOVERNMENT AUTHORITIES TO BEGIN OUR
CONSTRUCTION OF THE SECOND PHASE PROJECT. IF WE FAIL TO OBTAIN ALL REQUIRED
LICENSES, PERMITS, OR APPROVALS, WE MAY HAVE TO CEASE OUR OPERATIONS.

Before we can develop a property, we must obtain a variety of approvals from
local and municipal governments with respect to such matters as zoning, density,
subdivision, traffic considerations, site planning and environmental issues.
Although there are currently no unfavorable rulings that would have a
significant adverse effect on the development of our proposed Second Phase of
Dahua Garden, there is no assurance that we will be able to obtain all required
licenses, permits, or approvals from government authorities. If we fail to
obtain all required licenses, permits, or approvals, we may have to cease our
operations.

RECENT PRC REGULATIONS RELATING TO CUTTING DOWN LUXURY SINGLE FAMILY HOUSE
CONSTRUCTIONS MAY LIMIT OUR ABILITY TO IMPLEMENT OUR BUSINESS PLAN. IF NO
CONSENTS AND APPROVALS ARE OBTAINED, WE MAY HAVE TO CEASE OUR SECOND PHASE OF
SINGLE LUXURY FAMILY HOUSE OPERATIONS, AND CHANGE OUR BUSINESS PLAN TO BUILD
APARTMENT BUILDINGS.

In August 2006, the Chinese government issued a series of rules and regulations
in an attempt to push down rising house prices in China by cutting down luxury
single family house constructions and supporting construction of apartment
buildings. Under the government's new policy, (i) no single family houses can be
built, if the construction has not started, without special construction
permits. All permits issued previously have to be re-reviewed and re-approved;
and (2) the land previously acquired for luxury housing construction have to be
revalued and sold to the people who offer the most money for the land. Because
of those new government policies, we have incurred a long delay for obtaining
the consents and approvals to commerce our construction for the second phase of
Dahua Garden. In May 2007, we contacted a Beijing Municipal Government agency,
who is responsible for the issuance of construction permits, for construction
approval time frame guidance. We were told that our construction permit is
likely to be issued for the following two reasons: (1) We have completed our
first phase of Dahua Garden; and (2) We have acquired for this land for almost
ten (10) years. We are expected that we can obtain our construction approvals
by the middle of 2008. However, there is no assurance that we will obtain those
consents and approvals from the government. If no consents and approvals are
obtained, we may have to cease our second phase of single luxury family house
operations, and change our business plan to build apartment buildings. As of the
date of this report, we don't have any current plans or arrangements for
development of apartment buildings.

WE HAVE IDENTIFIED MATERIAL WEAKNESSES IN OUR INTERNAL CONTROL OVER FINANCIAL
REPORTING, WHICH COULD CONTINUE TO IMPACT NEGATIVELY OUR ABILITY TO REPORT OUR
RESULTS OF OPERATIONS AND FINANCIAL CONDITION ACCURATELY AND IN A TIMELY MANNER.

The Company has identified material weaknesses in our internal control over
financial reporting as of December 31, 2006 and March 31, 2007 because of
material weaknesses identified in management's assessment of the effectiveness
of such internal control as of that dates related to construction interest
accounting. These material weaknesses have resulted in the restatements of our
previously reported financial statements for the quarter ended March 31, 2006.
The Company has taken the necessary actions to remediate the material weakness
identified.  Please see "Item 8A. Controls and Procedures" of this report for
more information on the status of the Company's internal control over financial
reporting. These material weaknesses, if not remediated or fail to remediate,
could create an increased risk of misstatement of financial results, which, if
material, may require future restatement thereof. A failure to achieve and
maintain effective internal controls over our financial reporting could result
in the loss of investor confidence in the reliability of our financial
statements, which in turn could harm our business and negatively impact the
market value of our common stock. Moreover, we anticipate that we will incur
considerable costs and devote significant management time and other resources
to comply with Section 404 of the Sarbanes-Oxley Act and other requirements.

WE ACT AS GENERAL CONTRACTOR ON OUR CONSTRUCTION PROJECTS, AND IF ANY OF OUR
SUBCONTRACTORS SHOULD FAIL TO COMPLETE THEIR JOBS ON TIME, OUR BUSINESS COULD BE
DISRUPTED.

We act as general contractor on our construction projects. We hire unaffiliated
subcontractors to do work for us. In the event that any of our subcontractors
should fail to complete their jobs on time, our business could be disrupted,
which will have an adverse effect on our results of operation and our financial
condition.

WE ARE VULNERABLE TO CONCENTRATION RISKS BECAUSE OUR OPERATIONS ARE EXCLUSIVELY
IN THE BEIJING, CHINA MARKET.

We operate our business in Beijing, China. All of our revenues will be derived
from the sale of our luxury single-family houses in Beijing, China. Although
some of our customers are from the neighboring areas in Beijing, we may not be
able to generate adequate revenue if local business conditions in Beijing
change adversely. These changes may include business downsizing, industry
slowdowns, local oversupply or reduction in demand for real estate properties,
and changes in local governmental policies. Operating exclusively in Beijing
exposes us to greater economic risks than if we operated in several geographic
regions. Any adverse changes in business conditions in Beijing, China, could
adversely impact our financial condition, results of operations and cash flow.

WE DEPEND ON KEY PERSONNEL FOR THE SUCCESS OF OUR BUSINESS. OUR BUSINESS MAY BE
SEVERELY DISRUPTED IF WE LOSE THE SERVICES OF OUR CEO OR FAIL TO SUCCESSFULLY
RECRUIT QUALIFIED MANAGERIAL PERSONNEL HAVING EXPERIENCE IN BUSINESS.

Our success is heavily dependent upon the continued service of Yonglin Du, our
chief executive officer. Mr. Du has valuable personal relationships with
government agencies and executive officers in the industry. A good personal
relationship is sometimes crucial for doing business in China. If Mr. Du is
unable or unwilling to continue in his position, we may not be able to easily
replace him. Loss of his services could delay our applications for construction
permit and land acquisition, and our business may be severely disrupted. We do
not maintain key-man insurance on the life of Mr. Du. In addition, in order to
successfully implement and manage our business plan, we will be dependent upon,
among other things, successfully recruiting qualified managerial personnel
having experience in business. Competition for qualified individuals is intense.
There can be no assurance that we will be able to retain existing employees or
that we will be able to find, attract and retain qualified personnel on
acceptable terms.

OUR OFFICERS AND DIRECTORS ARE SUBJECT TO CONFLICTS OF INTEREST, AND THERE IS
A RISK THAT THEY MAY PLACE THEIR INTERESTS AHEAD OF YOURS.

We believe that our officers and directors will be subject to conflicts of
interest. The conflicts arise from their relationships with our affiliate.
Yonglin Du, our chief executive officer, also serves as president and a director
of Dahua Project Management Group Co. Ltd. ("Dahua Group"), a Beijing Municipal
Government licensed construction project supervising business entity. Hua Meng,
our chief financial officer, and Qinna Zeng, our corporate secretary, are also
employed by Dahua Group. They may have conflicts of interest in allocating time,
services, and functions between us and Dahua Group, in which any of them are or
may become involved. Mr. Du anticipates devoting a minimum of twenty to thirty-
two hours per week of his business hours, and each of Ms. Meng and Ms. Zeng
fifteen to twenty hours of their business hours to our business activities. If
and when the business operations increase and a more extensive time commitment
is needed, they are prepared to devote more time to our affairs, in the event
that becomes necessary.

To ensure that potential conflicts of interest are avoided or declared to us
and to comply with the requirements of the Sarbanes-Oxley Act of 2002, our
Board of Directors, on January 30, 2005, adopted a Code of Business Conduct
and Ethics, among other things, to reduce potential conflicts of interest.
Conflicts of interest must, to the extent possible, be avoided, and any material
transaction or relationship involving a potential conflict of interest must be
reviewed and approved in advance by a majority of the board of directors, or,
if required by law, a majority of disinterested stockholders. No personal loans
will be made to executive officers and directors.

All our transactions with affiliates have been and will be made on terms no
less favorable to us than could have been obtained from unaffiliated third
parties. Our policy is to require that a majority of board members approve all
transactions between us and our officers, directors, principal stockholders and
their affiliates.

WE HAVE NOT CARRIED PROPERTY OR CASUALTY INSURANCE. ANY BUSINESS DISRUPTION,
LITIGATION OR NATURAL DISASTER MIGHT RESULT IN SUBSTANTIAL COSTS AND DIVERSION
OF RESOURCES.

The insurance industry in China is still at an early stage of development.
Insurance companies in China offer limited business insurance products, and do
not, to our knowledge, offer business liability insurance. As a result, we do
not have any business liability insurance coverage for our operations.  Any
business property loss, natural disaster or litigation might result in
substantial costs and diversion of resources.

OUR QUARTERLY OPERATING RESULTS, REVENUES AND EXPENSES MAY FLUCTUATE
SIGNIFICANTLY, WHICH COULD HAVE AN ADVERSE EFFECT ON THE MARKET PRICE OF OUR
COMMON STOCK.

Our operating results, revenues and expenses may fluctuate significantly from
quarter to quarter due to a variety of factors including:

   o   The timing, size and execution of sales contracts and home deliveries;

   o   Lengthy and unpredictable sales cycles;

   o   Changes in our operating expenses; and

   o   Fluctuations in general economic conditions.

We believe that period-to-period comparisons of our results of operations are
not a good indication of future performance. It is possible that our operating
results will be below your expectations. In that event, the trading price of our
common stock may fall.

MANY OF OUR COMPETITORS ARE SIGNIFICANTLY LARGER THAN WE ARE, AND THEY HAVE
GREATER FINANCIAL RESOURCES AND HAVE MORE EXPERIENCED MANAGERS THAN WE DO.

We are a small company and have little market share in our target market. The
market of residential housing development in Beijing, China, is highly
competitive. We compete with numerous entities, many of which are significantly
larger than we are, and have greater financial resources and have more
experienced managers than we do. As a result, they may be able to respond more
quickly to new or emerging house plans or construction materials and changes in
customer demands or to devote greater resources to the development, promotion
and sale of their products or services than we can. If we cannot compete
effectively, we may never become profitable. Although no one of our competitors
currently dominates or significantly influences the market, they could adversely
affect us.

THE RESIDENTIAL REAL ESTATE DEVELOPMENT INDUSTRY IS A HIGH RISK INDUSTRY. IF
MARKET CONDITIONS CHANGE DRAMATICALLY UNFAVORABLY TO US, WE MAY GO OUT OF
BUSINESS.

The real estate development industry in general, and the residential luxury real
estate development industry in particular, is a high risk industry, subject to
changes in general economic conditions, fluctuating interest rates, and changing
demand for the types of developments being considered. Volatility in local and
regional land use demands, as well as changing supply and demand for the
specific uses for which the real property is being developed, are also factors
in assessing the relative risks of the business. The demand for residential real
estate development is particularly sensitive to changing interest rates and
shifting demographics. Both of these factors affecting the demand for
residential housing are highly unpredictable over both the short-and long-term.
If market conditions change dramatically and unfavorably to us, we may go out of
business.

                 Risks Related to Doing Business in China
                 ----------------------------------------

POLITICAL AND ECONOMIC POLICIES IN CHINA COULD AFFECT OUR BUSINESS IN
UNPREDICTABLE WAYS.

Substantially all of our assets are located in China and substantially all of
our revenues are expected to derive from our operations in China. Therefore, our
results of operations and prospects are subject, to a significant degree, to
economic and political developments in China. The economy of China differs
from the economies of most developed countries in many respects, including:

   o   The extent of government involvement;

   o   Level of development; and

   o   Allocation of resources.

The economy of China has been in transition from a planned economy to a more
market-oriented economy. Although in recent years the Chinese government has
implemented measures emphasizing the utilization of market forces and the
reduction of state ownership of productive assets, a substantial portion of
productive assets in China is still owned by the Chinese government, which
continues to play a significant role in regulating China's economic
development, setting monetary policy and providing preferential treatment to
particular industries or companies. Political and economic policies in China
could affect our business in unpredictable ways. If there are any unfavorable
changes in government policies, such as government control over capital
expenditures, changes in monetary policy, or changes in planning and zoning
policy, we may experience delays or other problems in obtaining government
permits or licenses to start or complete our projects.

OUR ASSETS, OFFICERS AND DIRECTORS ARE LOCATED OUTSIDE OF THE U.S. IT IS
DIFFICULT TO EFFECT SERVICE OF PROCESS AND ENFORCEMENT OF LEGAL JUDGMENTS UPON
US AND OUR OFFICERS AND DIRECTORS.

Our assets, officers and directors are located in China. As a result, it may
be difficult to effect service of process within the United States and enforce
judgment of the US courts obtained against us and our executive officers and
directors. Particularly, our shareholders may not be able to:

    o    Effect service of process within the United States on us or any of our
executive officers and directors;

    o    Enforce judgments obtained in U.S. courts against us based upon the
civil liability provisions of the U.S. federal securities laws;

    o    Enforce, in a court in China, judgments of U.S. courts based on the
civil liability provisions of the U.S. federal securities laws; and

    o    Bring an original action in a court in China to enforce liabilities
against us or any of our executive officers and directors based upon the U.S.
federal securities laws.

GOVERNMENT CONTROL OF CURRENCY CONVERSION MAY AFFECT OUR ABILITY TO PAY
DIVIDENDS DECLARED, IF ANY, IN FOREIGN CURRENCIES.

It is expected that a substantial portion of our revenues, if any, will be in
"yuan", the national currency of China, which is currently not a freely
convertible currency. A portion of our revenues may have to be converted into
US dollars to make payment of dividends declared, if any, in respect of our
common shares. Under China's existing foreign exchange regulations, we will
be able to pay dividends in foreign currencies without prior approval from the
State Administration of Foreign Exchange of China by complying with certain
procedural requirements. However, the Chinese government may take measures at
its discretion in the future to restrict access to foreign currencies if
foreign currencies become scarce in China. We may not be able to pay dividends
in foreign currencies to our shareholders if the Chinese government restricts
access to foreign currencies for current account transactions.

FLUCTUATIONS IN THE EXCHANGE RATE BETWEEN THE CHINESE CURRENCY AND THE UNITED
STATES DOLLAR MAY BRING DOWN OUR OPERATING INCOME.

The functional currency of our operations in China is "Yuan." Results of our
operations are translated at average exchange rates into United States dollars
for purposes of reporting results. As a result, fluctuations in exchange rates
may adversely affect our expenses and results of operations as well as the
value of our assets and liabilities. On July 21, 2005, the Chinese government
changed its decade-old policy of pegging the value of yuan to the U.S. dollar.
Under the new policy, Yuan is permitted to fluctuate within a narrow and
managed band against a basket of certain foreign currencies. This change in
policy has resulted in an approximately 5.6% appreciation of the yuan against
the U.S. dollar between July 21, 2005 and December 31, 2006. Our revenues and
costs are denominated in yuan, and our financial assets are also denominated
in yuan. Any significant fluctuations in the exchange rate between the yuan
and the United States dollar may bring down our operating income and lower our
stock price. We have no current plans to undertake any hedging activity to
minimize exchange rate fluctuations.

                  Risks Related to Investment in Our Securities
                  ---------------------------------------------

THERE IS NOT NOW AND THERE MAY NEVER BE A PUBLIC MARKET FOR OUR COMMON STOCK
SHARES, WHICH MAY MAKE IT DIFFICULT FOR SHAREHOLDERS TO SELL SHARES.

There is currently no market for our common stock and we can provide no
assurance that a market will develop. We plan to apply for listing of our common
stock on the OTC Bulletin Board upon the effectiveness of our registration
statement on Form SB-2, which we have filed with the SEC. However, there is no
assurance that our shares will be traded on the Bulletin Board or, if traded,
that a public market will materialize. If no market is ever developed for our
shares, it will be difficult for shareholders to sell their stock. In such a
case, shareholders may find that they are unable to achieve benefits from their
investment.

OUR COMMON STOCK IS DEEMED A PENNY STOCK. AS A RESULT, TRADING OF OUR SHARES IS
SUBJECT TO SPECIAL REQUIREMENTS THAT COULD IMPEDE OUR SHAREHOLDERS' ABILITY TO
RESELL THEIR SHARES.

The shares offered by this prospectus constitute penny stock under the
Securities Exchange Act of 1934 (the "Exchange Act"). The shares will remain
penny stock for the foreseeable future. As defined in Rule 3a51-1 of the
Exchange Act, penny stocks generally are equity securities with a price of less
than $5.00, other than securities registered on certain national securities
exchanges or quoted on the NASDAQ system, provided that current price and volume
information with respect to transactions in such securities is provided by the
exchange or system.

Section 15(g) of the Exchange Act and Rule 15g-2 of the Exchange Act require
broker-dealers dealing in penny stocks to provide potential investors with a
document disclosing the risks of penny stocks and to obtain a manually signed
and dated written receipt of the document before effecting any transaction in
a penny stock for the investor's account. Moreover, Rule 15g-9 of the Exchange
Act requires broker-dealers in penny stocks to approve the account of any
investor for transactions in such stocks before selling any penny stock to that
investor. This procedure requires the broker-dealer to:

   o    Obtain from the investor information concerning his or her financial
situation, investment experience and investment objectives;

   o    Reasonably determine, based on that information, that transactions in
penny stocks are suitable for the investor and that the investor has significant
knowledge and experience to be reasonably capable of evaluating the risks of
penny stock transactions;

   o    Provide the investor with a written statement setting forth the basis
on which the broker-dealer made the determination in (ii) above; and

   o    Receive a signed and dated copy of such statement from such investor,
confirming that it accurately reflects the investor's financial situation,
investment experience and investment objectives.

Compliance with these requirements may make it more difficult for investors in
our common stock to resell the shares to third parties or to otherwise dispose
of them.


Item 7.   Financial Statements


The following report of independent registered public accounting firm and the
consolidated financial statements of the Company are included below:

  Report of Independent Registered Public Accounting Firm..............       30
  Consolidated Balance Sheets..........................................       31
  Consolidated Statements of Operations and Comprehensive Income.......       32
  Consolidated Statements of Cash Flows................................       33
  Consolidated Statements of Changes in Stockholders' Equity...........       34
  Notes to Consolidated Financial Statements...........................       35






                              Dahua, Inc.

                   Consolidated Financial Statements

                  For the Year Ended December 31, 2006






                        Child, Van Wagoner & Bradshaw, PLLC

 A Professional Limited Liability Company of CERTIFIED PUBLIC ACCOUNTANTS
          5296 S. Commerce Dr., Suite 300, Salt Lake City, UT 84107
                   PHONE: (801) 281-4700  FAX: (801) 281-4701



              Report of Independent Registered Public Accounting Firm


To The Board of Directors
Dahua, Inc.
Beijing, Peoples Republic of China

We have audited the accompanying consolidated balance sheet of Dahua, Inc. (the
Company) as of December 31, 2006, and the related consolidated statements of
operations and comprehensive income (loss), changes in stockholders' equity, and
cash flows for the years ended December 31, 2006 and 2005. These consolidated
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States of America). Those standards require
that we plan and perform the audits to obtain reasonable assurance about whether
the consolidated financial statements are free of material misstatement. The
Company is not required to have, nor were we engaged to perform, an audit of
its internal control over financial reporting. Our audits included consideration
of internal control over financial reporting, as a basis for designing audit
procedures that are appropriate in the circumstances, but not for the purpose
of expressing an opinion on the effectiveness of the Company's internal control
over financial reporting. Accordingly, we express no such opinion. An audit
also includes examining, on a test basis, evidence supporting the amounts and
disclosures in the consolidated financial statements, assessing the accounting
principles used and significant estimates made by management, as well as
evaluating basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Dahua, Inc. as of
December 31, 2006, and the results of its operations and its cash flows for the
years ended December 31, 2006 and 2005, in conformity with accounting
principles generally accepted in the United States of America.


/s/ Child, Van Wagoner & Bradshaw, PLLC
---------------------------------------
Child, Van Wagoner & Bradshaw, PLLC
March 6, 2007
Salt Lake City, Utah









                                            DAHUA, INC.
                                    CONSOLIDATED BALANCE SHEET

<TABLE>
<CAPTION>


                                                                       December 31, 2006
			            ASSETS                                  ------------------


                                                                   <c>
Current assets
 Cash and cash equivalents.....................................        $        2,338,835
 Inventory (note 4)............................................                13,898,322
                                                                       ------------------
    Total current assets.......................................                16,237,157

Property, plant & equipment
 Computer equipment............................................                    30,047
 Office equipment..............................................                    74,945
 Telephones....................................................                     2,871
 Vehicles......................................................                   278,506
                                                                       ------------------
    Total property, plant & equipment..........................                   386,369
    Accumulated depreciation...................................                  (49,490)
                                                                       -------------------
    Net property, plant and equipment..........................                   336,879

Tax prepaid....................................................                   267,089
Restricted cash (note 7).......................................                   341,672

Total assets...................................................        $       17,182,797
                                                                       ==================

                  LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities
 Accounts payable..............................................         $         404,403
 Customer deposits (note 6)....................................                 9,576,401
 Short-term loans-related parties (note 5).....................                 2,458,461
 Accrued interest-short-term loans, related parties............                   718,238
 Accrued others................................................                    90,966
                                                                        -----------------
    Total current liabilities..................................                13,248,469

Minority interest in subsidiary................................                   782,025

Stockholders' equity
 Preferred stock: par value $.0001; 20,000,000 shares
  authorized; none issued and outstanding......................                         -
 Common stock: par value $.0001; 80,000,000 shares
  authorized; 25,000,000 issued and outstanding................                     2,500
 Additional paid in capital....................................                 3,130,452
 Accumulated deficit...........................................                 (174,998)
 Accumulated other comprehensive income........................                   194,349
                                                                        -----------------
    Total stockholders' equity.................................                 3,152,303

Total liabilities and stockholders' equity.....................         $      17,182,797
                                                                        =================






                   See accompanying notes to consolidated financial statements


</TABLE>






                                         DAHUA, INC.

             CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME

<TABLE>
<CAPTION>

                                                                        Year ended
                                                                        December 31,
                                                            ------------------------------------
                                                                   2006                2005
                                                            ----------------    ----------------

                                                         <c>                <c>
Revenues
 Sales revenues......................................       $     11,800,257    $     2,267,399
 Cost of goods sold..................................              8,065,164          1,530,731
                                                            ----------------    ---------------
Gross profit                                                       3,735,093            736,668

Expenses
 Advertising.........................................              1,824,182             98,970
 Depreciation........................................                 19,006              8,635
 Payroll expense.....................................                203,083             65,201
 Provision for flat selling below cost...............                180,995                  -
 Other general and administrative....................                635,969            301,782
                                                            ----------------    ---------------
Total expenses                                                     2,863,235            474,588
                                                            ----------------    ---------------

Net income from operations...........................                871,858            262,080

Other income (expense)
 Interest expense....................................              (237,158)            (9,768)
 Other income........................................                 90,981                  -
 Interest income.....................................                 11,518              3,625
                                                             ---------------    ---------------
Total other income (expense).........................              (134,659)            (6,143)
                                                             ---------------    ---------------

Net income before taxes and minority interest........                737,199            255,937

Provision for income taxes...........................              (243,276)           (84,459)
                                                              --------------    ---------------
Net income before minority interest..................                493,923            171,478
Minority interest in subsidiary income...............                 98,785             34,296
                                                              --------------    ---------------
Net income...........................................         $      395,138    $       137,182
                                                              ==============    ===============

Foreign currency translation adjustment..............                123,666             70,683
                                                              --------------    ---------------
Comprehensive income.................................         $      518,804    $       207,865
                                                              ==============    ===============

Basic and diluted earnings (loss) per share..........         $         0.02    $          0.01
                                                              ==============    ===============
Weighted average common shares outstanding...........             25,000,000         22,520,548
                                                              ==============    ===============




                  See accompanying notes to consolidated financial statements


</TABLE>





                                           DAHUA, INC.

                             CONSOLIDATED STATEMENTS OF CASH FLOWS



<TABLE>
<CAPTION>
                                                                       Year ended
                                                                       December 31,
                                                           ----------------------------------
                                                                 2006             2005
                                                           -----------------  ---------------

                                                         <c>               <c>
Cash flows from operating activities:
  Net income..........................................      $       395,138    $      137,182
  Adjustments to reconcile net income to
   net cash (used in )operations:
    Depreciation......................................               19,006             8,635
    Minority interest.................................               98,785            34,296
  Changes in operating assets and liabilities:
    Inventory.........................................            1,509,217       (6,481,319)
    Prepaid construction costs........................                    -         1,531,457
    Tax prepaid.......................................            (261,447)                 -
    Accounts payable..................................              301,787            67,544
    Customer deposits.................................            3,035,808         1,256,601
    Accrued interest..................................              237,158           200,880
    Income taxe payable...............................            (226,518)           223,782
    Other accruals....................................               57,067             (518)
                                                           ----------------   ---------------
       Net cash provided by (used in) operations......            5,166,001       (3,021,460)

Cash flows from investing activities:
 Purchases of property, plant & equipment.............            (316,551)                 -
 Due from related parties.............................               46,339                 -
                                                           ----------------   ---------------
       Net cash used in investing activities..........            (270,212)                 -

Cash flows from financing activities:
 Acquired treasury stock..............................                    -         (100,000)
 Payments on loans payable............................          (3,028,524)             4,260
 Proceeds from loans payable - related party..........                    -         2,405,715
 Investment in subsidiary by minority owner...........                    -	        566,265
                                                           ----------------   ---------------
    Net cash provided by (used in) financing activities         (3,028,524)         2,876,240

Effect of rate changes on cash........................               54,516            87,501

Increase (decrease) in cash and cash equivalents......            1,921,781          (57,719)

Cash and cash equivalents, beginning of period........              417,054           474,784
                                                            ---------------   ---------------
Cash and cash equivalents, end of period..............      $     2,338,835   $       417,065
                                                            ===============   ===============


Supplemental disclosures of cash flow information:

 Interest paid in cash................................      $             -   $         9,768
                                                            ===============   ===============
 Income taxes paid in cash............................      $       339,168   $             -
                                                            ===============   ===============
 Sales taxes paid in cash.............................      $     1,131,322   $             -
                                                            ===============   ===============





                      See accompany notes to consolidated financial statements

</TABLE>





                                            DAHUA INC.

                    CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>

                                                                                                  Accumulated
                                                                  Additional                        Other
                                    Common          Common         Paid in         Retained      Comprehensive       Total
                                    Shares          Stock          Capital          Deficit          Income          Equity
                                --------------   ----------  -----------------  ---------------  --------------   ------------

                             <c>              <c>          <c>               <c>               <c>             <c>
Balance January 1, 2005          20,000,000      $   2,000    $      965,352     $    (707,318)    $        -     $    260,034

Stock purchased and canceled
 in merger transaction                    -              -         (100,000)                  -             -        (100,000)

Issued common stock               5,000,000            500         2,265,100                  -             -        2,265,600

Foreign currency translation              -              -                 -                  -        70,683           70,683

Net income                                -              -                 -            137,182             -          137,182
                                --------------   -----------  ----------------   ---------------  ------------   -------------
Balance December 31, 2005        25,000,000      $   2,500    $    3,130,452     $    (570,136)    $    70,683    $  2,633,499

Net income                                -              -                 -            395,138              -         395,138

Foreign currency translation              -              -                 -                  -         123,666        123,666
                               --------------   ------------   ---------------   ---------------  -------------  --------------
Balance December 31, 2006        25,000,000      $   2,500     $   3,130,452     $     (174,998)    $   194,349   $  3,152,303




                             See accompany notes to consolidated financial statements

</TABLE>








                                          DAHUA INC.
                           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



1.  Nature of operations

Dahua, Inc. ("Dahua") was incorporated on March 8, 2002 in the State of Delaware
as Norton Industries Corp. ("Norton"). The name was changed to Dahua, Inc. on
February 7, 2005 as result of a reverse acquisition in which Norton acquired all
capital shares of Bauer Invest Inc. ("Bauer").  Incident to the reverse
acquisition the Company paid $100,000 to the previous shareholders of Norton for
shares of stock that were canceled. The acquisition was accounted for as a
reverse merger, as the post acquisition owners and control persons of Dahua are
substantially the same as the pre acquisition owners and control persons of
Bauer and the $100,000 paid to purchase and cancel the previous shares was
treated as an adjustment to paid in capital.

Bauer Invest Inc. was incorporated on December 10, 2003, under the laws of the
Territory of the British Virgin Islands ("BVI"). Bauer has had no operations
other than the acquisition of 80% of Beijing Dahua Real Estate Development, Ltd.
("Subsidiary") on May 25, 2004. The Subsidiary is a corporation established on
September 24, 2001 in the People's Republic of China ("PRC"). The acquisition
was accounted for as a reverse merger, as the post acquisition owners and
control persons of Bauer are substantially the same as the pre-acquisition
owners and control persons of the subsidiary. These financial statements are
essentially those of the Subsidiary with a recapitalization to show the effects
due to the reverse mergers. The consolidated entity is hereafter referred to
as "the Company".

The Company engages in the development of real estate and the sale of commodity
housing. The Company has completed all of the construction on its current
development project and all of the houses are sold or available for sale.

2.  Basis of Presentation

The consolidated financial statements include the accounts of Dahua, Inc., Bauer
Invest, Inc. and Beijing Dahua Real Estate Development, Ltd. All material
intercompany accounts and transactions have been eliminated in consolidation.
The Company records minority interest expense, which reflects the 20% portion
of the earnings of Beijing Dahua Real Estate Development, Ltd. allocable to
holders of the minority interest.

The accompanying consolidated financial statements are prepared in accordance
with accounting principles generally accepted in the United States of America
("US GAAP"). This basis differs from that used in the statutory accounts of the
Company, which were prepared in accordance with the accounting principles and
relevant financial regulations applicable to enterprises in the PRC. All
necessary adjustments have been made to present the financial statements in
accordance with US GAAP.

3.  Summary of Significant Accounting Policies

Economic and Political Risks
----------------------------

The Company faces a number of risks and challenges as a result of having primary
operations and markets in the PRC. Changing political climates in the PRC could
have a significant effect on the Company's business.

Cash and Cash Equivalents
-------------------------

For purposes of the statements of cash flows, cash and cash equivalents includes
cash on hand and demand deposits held by banks. Deposits held in financial
institutions in the PRC are not insured by any government entity or agency.

Trade Accounts Receivable
-------------------------

Trade accounts receivable are recognized and carried at original invoice amount
less an allowance for any uncollectible amounts. An estimate for doubtful
accounts is made when collection of the full amount becomes questionable. The
Company had no trade accounts receivable at December 31, 2006 and 2005.

Inventories
-----------

Inventories consist primarily of land acquisition and development costs,
engineering, infrastructure, capitalized interest, and construction costs. The
inventories are valued at cost based on the level of completion using the
weighted-average method. The Company made a provision of $180,995 for houses
which will be sold below cost. As of December 31, 2006, the Company didn't
recognize the sales revenues of such houses, because they didn't meet the
requirement of revenue recognition. However, the sales prices of such houses
were predetermined. Since the cost per square meter increased a little in 2006,
it is estimated that the revenues will be lower than the costs when the
revenues are recognized.

Property, Plant, and Equipment
------------------------------

Property, plant, and equipment are carried at cost less accumulated
depreciation, which is computed using the straight-line method over the useful
lives of the assets. Upon disposal of assets, the cost and related accumulated
depreciation are removed from the accounts and any gain or loss is included in
income.  Property and equipment are depreciated over their estimated useful
lives as follows:

     Computer equipment           3 years
     Office equipment             7 years
     Vehicles                     7 years

Depreciation expense for the years ended December 31, 2006 and 2005 was $19,006
and $8,635, respectively.

Long-term assets of the Company are reviewed annually to assess whether the
carrying value has become impaired, according to the guidelines established in
Statement of Accounting Standards (SFAS) No. 144, "Accounting for the Impairment
or Disposal of Long-Lived Assets." The Company also evaluates the periods of
amortization to determine whether subsequent events and circumstances warrant
revised estimates of useful lives. No impairment of assets was recorded in the
periods reported.

Revenue Recognition
-------------------

The Company recognizes revenue on the sale of a house when the consummation of
a sale is evidenced by: 1) a contractual arrangement that is binding to both
parties; 2) the exchange of all consideration (i.e. the seller has transferred
to the buyer the usual risks and rewards of ownership and the buyer has made
payment in full to the seller); 3) the arrangement of all permanent financing
for which the seller is responsible and; 4) the performance of all conditions
precedent to closing. No revenue is recognized when the Company's receivable
is subject to future subordination, as is the case when the Company guarantees
a bank loan for the period prior to the certification of title transfer.

Advertising Expenses
--------------------

Advertising costs are expensed as incurred.  Advertising expense amounted to
$1,824,182 and $98,970 for the years ended December 31, 2006 and 2005. The
reason for the large increase of advertising expenses is that the Company put
more on the advertising to make more people familiar with the project.

Foreign Currency and Comprehensive Income
-----------------------------------------

The accompanying financial statements are presented in United States ("US")
dollars. The functional currency is the Yuan Renminbi ("RMB") of the PRC. The
financial statements are translated into US dollars from RMB at period-end
exchange rates for assets and liabilities, and weighted average exchange rates
for revenues and expenses. Capital accounts are translated at their historical
exchange rates when the capital transactions occurred.

During July 2005, China changed its foreign currency exchange policy from a
fixed RMB/US dollar exchange rate into a flexible rate under the control of
China's government.  We used the Closing Rate Method in translation of the
financial statements.

RMB is not freely convertible into the currency of other nations. All such
exchange transactions must take place through authorized institutions. There
is no guarantee the RMB amounts could have been, or could be, converted into
US dollars at rates used in translation.

Taxes
-----

Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases. Deferred tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which those temporary
differences are expected to reverse. The effect on deferred tax assets and
liabilities of a change in tax rates is recognized in the statement of
operations in the period that includes the enactment date. A valuation
allowance is provided for deferred tax assets if it is more likely than not
these items will either expire before the Company is able to realize their
benefits, or that future deductibility is uncertain. Nearly all differences in
tax bases and financial statement carrying values are permanent differences.
Therefore, the Company has recorded no deferred tax assets or liabilities.

Estimates
---------

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosures of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of income and expenses during the reporting period. Actual
results could differ from those estimates.

Earnings Per Share
------------------

Basic earnings per common share ("EPS") are calculated by dividing net income
by the weighted average number of common shares outstanding during the year.
Diluted EPS is calculated by adjusting the weighted average outstanding shares,
assuming conversion of all potentially dilutive securities, such as stock
options and warrants, using the treasury stock method. The numerators and
denominators used in the computations of basic and diluted EPS are presented
in the following table:

<TABLE>
<CAPTION>
                                                            2006             2005
                                                       ----------------  --------------

                                                    <c>               <c>
NUMERATOR FOR BASIC AND DILUTED EPS
  Net income to common stockholders                     $       395,138   $     137,182
                                                        ===============   =============

DENOMINATORS FOR BASIC AND DILUTED EPS

  Weighted average shares of common stock outstanding	       25,000,000	     22,520,548
                                                        ---------------   -------------
  Add: dilutive equity securities outstanding                         -               -
                                                        ---------------   -------------
  Denominator for diluted EPS                                25,000,000      22,520,548
                                                        ---------------   -------------

EPS - Basic                                              $         0.02    $       0.01
                                                        ===============   =============
EPS - Diluted                                            $         0.02    $       0.01
                                                        ===============   =============

</TABLE>

The Company had no potentially dilutive securities outstanding at December 31,
2006 and 2005.

4.  Inventory

Inventory represents completed houses available for sale at December 31, 2006.
During 2005, the Company completed all of its construction-in-progress. As of
December 31, 2006, 30 units were sold, 30 units were reserved with clients'
deposits, and 16 units were available for sale.

5.  Related Party Transactions

Short-term loans due to related parties had balances of $3,176,699 and
$5,829,673 (including accrued interest) at December 31, 2006 and 2005,
respectively.  The loans carry an annual interest rate of 6 percent and are due
on demand.  Interest accrued on the loans was $237,158 and $200,880 for the
years ended December 31, 2006 and 2005. The interest amounts, which were accrued
for the year ended December 31, 2006, were expensed as interest expense since
houses were substantially constructed and ready for sales as of December 31,
2005.

6.  Customer deposits

Customer deposits consist of down payments received on sales contracts for
houses. When all of the conditions set forth in the Company's revenue
recognition policy are met, the Company will recognize the down payments as
revenue. The aggregate of the customers' deposits at December 31, 2006 was
$9,576,401. Of the 30 units reserved, 12 unit's deposits are money received from
bank arrangements (see note 7) in the amounts of $2,934,355. Accordingly, the
bank has liens against these 12 units.

7.  Off-Balance Sheet Arrangements

The Company entered into an agreement with  two banks that extended mortgage
loans to its home buyers, where the Company agrees to provide a certain limited
guarantee, which covers the risk before the conveyance of title upon closing.
Upon initiating the loan on behalf of the buyer for the down payment, the Banks
have withheld 5% of the loan, which was a percentage ranging from 5% to 20% in
June 2006, and deposited such funds into a segregated account in each bank. At
December 31, 2006, the balance of this separate account was $341,672. Since the
Company does not recognize revenue when its receivables are subject to future
subordination, the entire amount that could become payable to the bank under
the limited guarantee is recorded as a liability on the balance sheet and is
included in customer deposits, as is explained in note 6.

8. Tax

The Company made a provision for sales tax, which totaled $708,016 and $138,067
respectively for the year ended December 31, 2006 and 2005. The sales tax is
calculated on the basis of sales revenues. The provision for sales tax is
included as part of cost of inventory.

The Company made a provision for income tax, which totaled $243,276 and $84,459
respectively for the year ended December 31, 2006 and 2005. The income tax is
calculated on the basis of the net income before taxes and minority interest.

The Company paid sales tax and income tax in cash, which totaled $1,131,322 and
$339,168 respectively for the year ended December 31, 2006.

The Company owed individual tax on behalf of staff, which totaled $174 at
December 31, 2006.

9.  Additional Paid in Capital

The subsidiary increased its registered capital on May 12, 2005 and acquired the
license on May 19, 2005. In this capital increase, Dahua increased its
investment in the subsidiary by $2,265,600 and the minority shareholder
increased its investment by $566,265. Dahua Project Management Group advanced
funds to the Company to allow for the increase in investment. On September 21,
2005, the Company issued 4,750,000 shares to the individual owners of Dahua
Project Management Group at the price of $0.477 per share in exchange for the
short-term loans Dahua Group provided. According to the Share Exchange
Agreement signed on January 30, 2005, it is Dahua's responsibility to maintain
the proportionate ownership of the Company held by Comp Hotel International Ltd.
("Comp") and Waywood Investments Ltd. ("Waywood"). In this regard the Company
issued 212,500 shares and 37,500 shares to Comp and Waywood, respectively.
There's no cash inflow from this issuing. After the capital increase, the
subsidiary's registered capital is $4,036,145, of which the Company, through
Bauer, holds 80% of the shares.

10.  Stocks

The Company is authorized to issue up to 80,000,000 shares of common stock,
$.0001 par value, and 20,000,000 shares of preferred stock, $.0001 par value per
share. As of December 31, 2006, there were 25,000,000 shares of common stock
issued and outstanding, and no shares of preferred stock were issued and
outstanding.

11.  Contingencies

The Company has not, historically, carried any property or casualty insurance.
No amounts have been accrued for any liability that could arise from the lack of
insurance. Management feels the chances of such an obligation arising are
remote.

Deposits in banks in the PRC are not insured by any government entity or agency,
and are consequently exposed to risk of loss. Management believes the
probability of a bank failure, causing loss to the Company, is remote.

12.  Recent Accounting Pronouncements

In February 2007, the Financial Accounting Standards Board ("FASB") issued SFAS
No. 159, "The Fair Value Option for Financial Assets and Financial Liabilities-
including an amendment of FASB Statement No. 115". The statement permits
entities to choose to measure many financial instruments and certain other items
at fair value. The objective is to improve financial reporting by providing
entities with the opportunity to mitigate volatility in reported earnings caused
by measuring related assets and liabilities differently without having to apply
complex hedge accounting provisions. This Statement is expected to expand the
use of fair value measurement, which is consistent with the Board's long-term
measurement objectives for accounting for financial instruments. The Statement
is effective as of beginning of an entity's first fiscal year that begins after
November 15, 2007. The Company expects that the Statement will have no material
impact on its financial statements.

In September 2006, the Financial Accounting Standards Board ("FASB") issued SFAS
No. 158, "Statement of Financial Accounting Standards - an amendment of FASB
Statement No. 87,88,106, and 132 (R)". The statement improves financial
reporting by requiring an employer to recognize the overfunded or underfunded
status of a defined benefit postretirement plan (other than a multiemployer
plan) as an asset or liability in its statement of financial position and to
recognize changes in that funded status in the year in which the changes occur
through comprehensive income of a business entity or changes in unrestricted
net assets of a non-for-profit organization. The statement also improves
financial reporting by requiring an employer to measure the funded status of a
plan as of the date of its year-end statement of financial position, with
limited exceptions. The Company currently anticipate that SFAS No. 158 will not
have a material impact on our results of operations or financial position.

In September 2006, the Financial Accounting Standards Board ("FASB") issued
SFAS No. 157, "Statement of Financial Accounting Standards - Fair Value
Measurements". The statement defines fair value, establishes a framework for
measuring fair value in generally accepted accounting principles (GAAP), and
expands disclosures about fair value measurements. The statement applies under
other accounting pronouncements that require or permit fair value measurements,
the Board having previously concluded in those accounting pronouncements that
fair value is the relevant measurement attribute. Accordingly, the statement
does not require any new fair value measurements. However, for some entities,
the application of the statement will change current practice.  The statement
is effective for financial statements issued for years beginning after November
15, 2007, and interim periods within those fiscal years.  The Company currently
anticipates that SFAS No. 157 will not have a material impact on our results of
operations or financial position.

In February 2006, the Financial Accounting Standards Board ("FASB") issued SFAS
No. 155, "Accounting for Certain Hybrid Financial Instruments - an amendment of
FASB Statements No. 133 and 140". The statement permits fair value remeasurement
for any hybrid financial instrument that contains an embedded derivative that
otherwise would require bifurcation, clarifies which interest-only strips are
not subject to the requirements of Statement 133, establishes a requirement to
evaluate interests in securitized financial assets to identify interests that
are freestanding derivatives or that are hybrid financial instruments that
contain an embedded derivative requiring bifurcation, clarifies that
concentrations of credit risk in the form of subordination are not embedded
derivatives, and amends Statement 140 to eliminate the prohibition on a
qualifying special-purpose entity from holding a derivative financial instrument
that pertains to a beneficial interest other than another derivative financial
instrument. The Statement is effective for financial instruments acquired or
issued after the beginning of the first fiscal year that begins after September
15, 2006. The Company expects that the Statement will have no material impact
on its financial statements.



Item 8.   Changes In and Disagreements with Accountants on Accounting and
          Financial Disclosure

On or about January 1, 2006, Child, Sullivan & Company, our principal
accountant, changed its accounting practice from a corporation to a professional
limited liability company named Child, Van Wagoner & Bradshaw, PLLC. As this
is viewed as a separate legal entity, we dismissed Child, Sullivan & Company as
principal accountant and engaged Child, Van Wagoner & Bradshaw, PLLC, as our
principal accountant for our fiscal years ending December 31, 2005 and 2006
and the interim periods for 2005 and 2006. The decision to change principal
accountants was ratified by our Board of Directors.

None of the reports of Child, Sullivan & Company, on our financial statements
for either of the past two years or subsequent interim period contained an
adverse opinion or disclaimer of opinion, or was qualified or modified as to
uncertainty, audit scope or accounting principles.

There were no disagreements between us and Child, Sullivan & Company, for the
previous two fiscal years and interim period up to the date of dismissal on
any matter of accounting principles or practices, financial statement
disclosure, or auditing scope or procedure, which, if not resolved to the
satisfaction of Child, Sullivan & Company, would have caused them to make
reference to the subject matter of the disagreement in connection with its
report. Further, Child, Sullivan & Company has not advised us that: 1) internal
controls necessary to develop reliable financial statements did not exist; or
2) information has come to the attention of Child, Sullivan & Company which
made it unwilling to rely upon management's representations, or made it
unwilling to be associated with the financial statements prepared by
management; or 3) the scope of the audit should be expanded significantly, or
information has come to the attention of Child, Sullivan & Company that they
have concluded will, or if further investigated might, materially impact the
fairness or reliability of a previously issued audit report or the underlying
financial statements, or the financial statements issued or to be issued
covering the fiscal year ended December 31, 2006.

As a result of our acquisition of Bauer Invest Inc., we dismissed Stan J. H.
Lee, CPA, a member firm of DMHD Hamilton Clark & Co., as our independent public
accountant, and engaged Child, Sullivan & Company, the auditors of Bauer, as
our certifying accountants. Since September 2004, Bauer has engaged Child,
Sullivan & Company as its independent public accountants. The decision to
dismiss Stan J.H. Lee, CPA and appoint Child, Sullivan & Company was approved
by our whole Board of Directors.

Stan J.H. Lee, CPA served as the independent public accountants of our
predecessor, Norton Industries Corp., for the period from March 8, 2002
(inception) to October 2003, when Stan J. H. Lee, CPA became unqualified because
he did not register with the Public Company Accounting Oversight Board ("PCAOB")
as required by the Sarbanes - Oxley Act of 2002 (the "Act"). Pursuant to the
Act, accounting firms that are not registered with PCAOB are prohibited from
preparing or issuing audit reports on U.S. public companies and from
participating in such audits.

During the period as our independent public accountant, Stan J. H. Lee, CPA,
issued a report for the period from March 8, 2002 (date of inception) to
December 31, 2002. Stan J. H. Lee's report did not contain an adverse opinion
or a disclaimer of opinion, nor was it qualified or modified as to uncertainty,
audit scope or accounting principle, except that the report of Stan J. H. Lee
for such period indicated conditions which raised substantial doubt about our
ability to continue as a going concern.

During the period from March 8, 2002, to October 2003, there were no
disagreements between us and Stan J.H. Lee, CPA on any matter of accounting
principles or practices, financial statement disclosure, or auditing scope or
procedure, which disagreement(s), if not resolved to the satisfaction of Stan
J.H. Lee, CPA would have caused Stan J.H. Lee, CPA to make reference to the
matter of the disagreement(s) in connection with its reports. In addition,
during the period from March 8, 2002 to October 2003, there were no reportable
events as that term is described in Item 304(a)(1)(iv) of Regulation S-B.

At no time prior to January 30, 2005, did we (or anyone on behalf of us) consult
with Child, Sullivan & Company on matters regarding (i) the application of
accounting principles to a specified transaction, either completed or proposed,
or the type of audit opinion that might be rendered on its financial statements,
or (ii) any matter that was the subject of a disagreement with Stan J.H. Lee,
CPA or a reportable event, as defined in Item 304(a)(2) of Regulation S-B.



Item 8A.  Controls and Procedures


(a) Evaluation of disclosure controls and procedures.

The Company's Chief Executive Officer and Chief Financial Officer, after
evaluating the effectiveness of the Company's disclosure controls and procedures
(as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of the end of
the period covered by this report, have concluded that, the Company's disclosure
controls and procedures contained certain deficiencies and weaknesses in the
internal control over financial reporting, thus they concluded that, the
Company's disclosure controls and procedures were ineffective.

Recently our management evaluated, with the participation and under the
supervision of our Chief Executive Officer and Chief Financial Officer, the
effectiveness of our disclosure controls and procedures as of June 30, 2007.
Based on this evaluation, our Chief Executive Officer and our Chief Financial
Officer concluded that our disclosure controls and procedures are effective.

(b) Changes in internal controls over financial reporting.

There has been no change in our internal control over financial reporting that
occurred during our last fiscal quarter that has materially affected or is
reasonably likely to materially affect our internal control over financial
reporting, except as follows:

On December 6, 2006, we identified two material weaknesses in our internal
control over financial reporting related to construction interest accounting.
The amount of $51,220 interest expense was incorrectly shown as capitalized
construction interest. These material weaknesses resulted in the restatements of
our previously reported financial statements for the quarter ended March 31,
2006. The restatement resulted in (i) an increase in net loss of $40,736 for the
quarter ended March 31, 2006; (ii) a decrease in total assets of $50,920; and
(iii) a decrease in stockholders' equity of $40,736. The restatement has no
impact on the statement of cash flows.

In connection with this restatement, management assessed the effectiveness of
the Company's internal control over financial reporting, and identified the
following deficiencies:

   (a)   We lacked adequate resources with sufficient technical expertise to
properly account for construction in accordance with U.S. general accepted
according principles; and

   (b)   We lacked consistent and effective review and supervision to ensure
that the review of accounts entries supporting our construction interest
provision was conducted in sufficient detail by someone other than the preparer
of such entries.

Over the past six months, we have taken steps to strengthen our ability to
identify and resolve GAAP construction accounting issues as they arise.
Specifically, we have implemented new controls and procedures to substantially
mitigate the risks associated with the material weaknesses identified above:

   (1)  We provided additional training to our accounting staff on the
requirements of the U.S. generally accepted accounting principles to increase
their familiarity with those standards, and ensure their proper application of
the U.S. GAAP to various transactions, including construction accounting, and
other financial statements matters;

   (2)  We designated an experienced individual who is expected to provide
additional review over our presentation and disclosure in financial statements
and to provide further technical accounting expertise in applying U.S.
generally accepted accounting principles; and

   (3)  We adopted procedures to conduct additional detailed transaction review
and control activities to confirm that our financial statements for each period,
present fairly, in all material respects, our financial positions, results of
operations and cash flows for the periods presented in conformity with U.S.
generally accepted accounting principles.

   (4)  We adopted procedures to solicit the services of the outside consulting
firm to assist in complex and non-routine accounting transactions.

Our CEO and CFO do not expect that our internal controls and procedures will
prevent all error and all fraud. Although our internal controls were designed
to provide reasonable assurance of achieving their objectives, a control system,
no matter how well conceived and operated, can provide only reasonable, not
absolute, assurance that the objectives of the system are met. Further, the
design of a control system must reflect the fact that there are resource
constraints, and the benefits of controls must be considered relative to their
costs. Because of the inherent limitations in all control systems, no evaluation
of controls can provide absolute assurance that all control issues and instances
of fraud, if any, have been detected. These inherent limitations include the
realities that judgments in decision-making can be faulty and that breakdowns
can occur because of simple error or mistake. Additionally, controls can be
circumvented by the individual acts of some persons, by collusion of two or more
people or by management override of the control. The design of any system of
controls is also based partly on certain assumptions about the likelihood of
future events, and there can be no assurance that any design will succeed in
achieving its stated goals under all potential future conditions.



Item 8B.  Other Information


There were no events requiring disclosure that had not been made under Form 8K
in the fourth quarter of our fiscal year.




                                         PART III



Item 9.   Directors, Executive Officers, Promoters and Control Persons;
          Compliance with Section 16(a) of the Exchange Act


Directors and Executive Officers
--------------------------------

Each of our directors is elected by the shareholders to a term of one year and
serves until his or her successor is elected and qualified, or until he or she
resigns or is removed from office. Each of our officers is elected by the board
of directors to a term of one year and serves until his or her successor is duly
elected and qualified, or until he or she resigns or is removed from office. The
board of directors has no nominating or compensation committees. The board of
directors does not have an audit committee financial expert.

The name, address, age and position of our officers and directors are set forth
below:


   Name        Age                Position Held
------------  ----  ----------------------------------------------------------
Du Yonglin     65   President, Chief Executive Officer and Director
Wang Wulong    67   Director
Meng Hua       31   Chief Financial Officer
Zeng Qinna     29   Corporate Secretary

The following is a brief description of business experience of each of our
directors and executive officers during the past five years.

Mr. Yonglin Du has been our Chairman, Chief Executive Officer and President
since January 30, 2005.  From 1982 to 2003, Mr. Du held various positions in
China's petroleum and petrochemical industries, including Deputy Director of the
Research Institute of Daqing Oilfield, Head of Petroleum and Petrochemical
Division of the State Planning Commission, Deputy Director of the Energy
Institute of the State Planning Commission, President of Shanghai Petroleum and
Natural Gas Company. In 2000, he founded Dahua Project Management Group Co.
Ltd. ("Dahua Group"), of which he has been serving as its Chairman of the Board
of Directors and Chief Executive Officer. Dahua Group is a Beijing Municipal
Government licensed construction project supervising business entity located
in Beijing, China.

Mr. Wulong Wang has been our Director since January 30, 2005. A graduate of
Beijing Post and Telecommunication University, Mr. Wang is a senior engineer
and China's registered Consulting Engineer. He joined China's State Planning
Commission in 1979, and served as its Deputy Chief of Investment Bureau from
1988 to 1992, Chief of Key Construction Bureau from 1992 to 1994, Chief of
Investment Bureau from 1994 to 1995. From 1995 to 2002, Mr. Wang served as
the President of China International Engineering Consulting Co. Limited, and
from 2002 to the present as a member of the Expert Committee of China
Engineering Consulting Co. Limited, as well as a member of the Economic
Commission of Chinese National People's Political Consultative Conference.

Ms. Hua Meng has been our Chief Financial Officer since January 30, 2005. She
graduated from the Central University of Finance and Economics of China in July
2003 with a master degree in accounting. Ms. Meng is a Certified Public
Accountant in China. From July 1999 to May 2000, she was employed at Beijing
Baisheng Light Industry Development Co. Ltd. as an accountant. From July 2003
to the present, Ms. Meng has also been chief financial officer of Dahua Project
Management Group Co., Ltd., a Beijing Municipal Government licensed construction
project supervising business entity in Beijing, China.

Ms. Qinna Zeng has been our Corporate Secretary since January 30, 2005. She
graduated from the Central University of Finance and Economics in China in July
2003 with a master degree in finance. From July 1999 to August 2000, Ms. Zeng
worked for the Lichuan Branch of People's Bank of China as a statistician. From
July 2003 to the present, Ms. Zeng has also been corporate secretary of Dahua
Project Management Group Co. Ltd., a Beijing Municipal Government licensed
construction project supervising business entity in Beijing, China.

None of our directors and officers has ever held any position in a reporting
company.


Significant Employees
---------------------

There are no significant employees other than our executive officers.


Family Relationships
--------------------

There are no family relationships among directors or officers.


Involvement in Certain Legal Proceedings
----------------------------------------

During the past five years, none of our officers, directors, promoters or
control persons has had any involvement in any of the following events:

   1.  Any bankruptcy petition filed by or against any business of which such
person was a general partner or executive officer either at the time of the
bankruptcy or within two years prior to that time;

   2.  Any conviction in a criminal proceeding or being subject to a pending
criminal proceeding, excluding traffic violations and other minor offenses;

   3.  Being subject to any order, judgment or decree, not substantially
reversed, suspended or vacated, of any court of competent jurisdiction,
permanently enjoining, barring, suspending or otherwise limiting his
involvement in any type of business, securities or banking business; and/or

   4.  Being found by a court of competent jurisdiction, in a civil action, the
Securities and Exchange Commission or the Commodity Futures Trading Commission
to have violated a federal or state securities or commodities law, and the
judgment has not been reversed, suspended or vacated.


Code of Ethics
--------------

We had adopted a code of ethics that applies to its principal executive officer,
principal financial officer, principal accounting officer or controller, or
persons performing similar functions. A copy of the code of ethics may be
obtained by any person, without charge, who sends a written request to Dahua
Inc. c/o Corporate Secretary, 19th Floor, Building C, Tianchuangshiyuan,
Huizhongbeili, Chaoyang District, Beijing, China, 100012.


Section 16(a) Beneficial Ownership Reporting Compliance
-------------------------------------------------------

Section 16(a) of the Securities Exchange Act of 1934, as amended, requires our
officers and directors, and persons who own more than 10% of a registered class
of our equity securities, to file reports of ownership and changes in ownership
of our equity securities with the Securities and Exchange Commission. Officers,
directors and greater than 10% shareholders are required by the Securities and
Exchange Commission regulations to furnish us with copies of all Section 16(a)
filings. To our knowledge, for the year ended December 31, 2006, based solely
on a review of the copies of such reports furnished to us and representations
by these individuals that no other reports were required during the year ended
December 31, 2006, all Section 16(a) filing requirements applicable to our
directors, officers and greater than 10% beneficial owners have been timely
filed.



Item 10.  Executive Compensation


We have contracted with Beijing Guohong Dahua Economic Research Center, a
related party, to provide administrative and management services.  Included in
those services are the payment of officer salaries and provision of office
space and other shared costs and services. We accrued $74,349 for the year
ending December 31, 2005, which was still accrued at December 31, 2006, into
short-term loans due to related parties for payment of the services.

SUMMARY COMPENSATION TABLE
--------------------------

                                    SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>

---------------------------------------------------------------------------------------------------------
                                                          Non-          Nonquali-
                                                          Equity         fied
                                                         Incentive     Deferred         All
Name and                               Stock    Option     Plan       Compensation      Other
Principal             Salary   Bonus   Awards   Awards  Compensation    Earnings   Compensation    Total
Position      Year    ($)       ($)     ($)      ($)       ($)            ($)           ($)         ($)
---------------------------------------------------------------------------------------------------------

            <c>     <c>      <c>     <c>      <c>      <c>           <c>           <c>         <c>
Yonglin Du    2006   25,086      -       -        -         -             -             -         25,086
CEO and       2005   24,145      -       -        -         -             -             -         24,145
President

Hua Meng      2006   7,526      -        -        -         -             -             -          7,526
CFO           2005   7,250      -        -        -         -             -             -          7,250
---------------------------------------------------------------------------------------------------------
</TABLE>

(i)  The annual salaries paid Mr. Du were 200,000 yuan, or approximately
$25,086, and Ms. Meng 60,000 yuan, or approximately $7,526, respectively.

At the end of the last completed fiscal year, there were no "most highly
compensated executive officers" as that term is defined in Item 402(a)(2) of
Regulation S-B, and there were no additional individuals for whom disclosure
would have been made in this table but for the fact that the individual was not
serving as our executive officer.


Outstanding Equity Awards at Fiscal Year-End Table
--------------------------------------------------

We do not have any equity incentive plans. No option or stock awards have been
granted to any of our executive officers or directors since our inception.
Pursuant to Item 402(a)(4) of Regulation S-B, the Outstanding Equity Awards at
Fiscal Year-End Table is omitted because there has been no compensation awarded
to, earned by, or paid to any of the named executive officers or directors
required to be reported in that table.


Compensation of Directors
-------------------------

The members of the Board of Directors are not compensated by us for their
service as members of the Board of Directors, but may be reimbursed for
reasonable expenses incurred in connection with attendance of meetings of the
board of directors. There are no arrangements pursuant to which directors are
or will be compensated in the future for any services provided as a director.


Employment Contracts, Termination of Employment, Change-in-Control Arrangements
-------------------------------------------------------------------------------

We have not entered employment agreements with our executive officers. There are
no compensatory plans or arrangements, including payments to be received from
us, with respect to a named executive officer, if such plan or arrangement
would result from the resignation, retirement or any other termination of such
executive officer's employment with us or form a change-in-control of us or a
change in the named executive officer's responsibilities following a change-in
-control.



Item 11.  Security Ownership of Certain Beneficial Owners and Management and
          Related Stockholder Matters


Security Ownership of Certain Beneficial Owners
-----------------------------------------------

The following table sets forth certain information regarding the beneficial
ownership of our common stock as of August 30, 2007, each person who is known
by us to own beneficially more than 5% of our outstanding common stock. We have
only one class of securities outstanding. Except as otherwise indicated, we
believe that the beneficial owners of the common stock listed below, based on
information furnished by such owners, have sole investment and voting power with
respect to such shares, subject to community property laws where applicable.
<TABLE>
<CAPTION>

                   Name and Address of         Amount & Nature of
Title of Class      Beneficial Owner           Beneficial Owner      Percent of Class
-------------   --------------------------- -----------------------  ----------------

             <c>                           <c>                      <c>
Common Stock    Yonglin Du                     1,900,000 shares          7.60%
                19th Floor, Building C,
                Tianchuangshiyuan,
                Huizhongbeili,
                Beijing, China, 100012
-------------------------------------------------------------------------------------
</TABLE>


Security Ownership of Management
--------------------------------

The following table sets forth certain information, as of August 30, 2007, as to
each class of our equity securities beneficially owned by all of our directors
and nominees, each of the named executive officers, and our directors and
executive officers as a group.
<TABLE>
<CAPTION>

                    Name and Address of       Amount & Nature of
Title of Class     Beneficial Owner(1)        Beneficial Owner      Percent of Class
--------------  ------------------------   -----------------------  ----------------

                   <c>                           <c>                   <c>
 Common Stock    Yonglin Du(2)                 1,900,000 shares          7.60%
                 19th Floor, Building C,
                 Tianchuangshiyuan,
                 Huizhongbeili,
                 Beijing, China, 100012

Common Stock     Qinna Zeng (3)                   72,500 shares           * (4)
                 #1712, Courtyard 5,
                 Beiyuan Road, Chaoyang District,
                 Beijing

Common Stock     Hua Meng (5)                     15,000 shares           *
                 # 8104, Courtyard 11
                 Anning Zhuang
                 Xisanqi, Haidian District,
                 Beijing

Common Stock     Wang Wulong                               Nil           Nil
                 c/o Dahua Inc.
                 19th Floor, Building C,
                 Tianchuangshiyuan,
                 Huizhongbeili,
                 Beijing, China, 100012

                 All officers and directors
                 as a group                       1,987,500 shares       7.95%
------------------------------------------------------------------------------------
</TABLE>


(1) 	The persons named above do not have any specified rights to acquire,
within 60 days of the date of this registration statement any options, warrants
or rights and no conversion privileges or other similar obligations exist.

(2) 	Yonglin Du is our CEO, President and a director.

(3) 	Qinna Zeng is our Corporate Secretary.

(4) 	Less than one percent of the total number of shares outstanding.

(5) 	Hua Meng is our Chief Financial Officer.


We do not have any securities that are convertible into common stock.


Changes in Control
------------------

There are no arrangements that the management is aware of that may result in
changes in control as that term is defined by the provisions of Item 403(c) of
Regulation S-B. There are no provisions within our Articles or Bylaws that
would delay or prevent a change of control.


Item 12.   Certain Relationships and Related Transactions


Transactions with Officers and Directors
----------------------------------------

As a shareholder of Bauer Invest Inc., Yonglin Du, our Chairman of the Board of
Directors and Chief Executive Officer received 1,520,000 shares of our common
stock as result of our reverse acquisition of Bauer on January 30, 2005. On
September 21, 2005, as a result of the registered capital increase of Dahua
Real Estate, Yonglin Du, received an additional 380,000 shares of our common
stock. Please see "Recent Sales of Unregistered Securities" for more detailed
information. The number of shares Mr. Du received in both events was on pro rata
basis, i.e., the number of shares he received is proportionate to the number of
shares he owned in Bauer.


Transactions with Promoters
---------------------------

Prior to the reverse merger on January 30, 2005, Comp Hotel International Ltd.
("Comp Hotel") and Waywood Investment Ltd. ("Waywood") collectively owned 100%
of capital stock of our predecessor, Norton Industries Corp. On January 30,
2005, Comp Hotel and Waywood entered into a share exchange agreement with Bauer
Invest Inc., a British Virgin Islands corporation ("Bauer"), pursuant to which
Comp Hotel and Waywood sold all outstanding capital shares, or 5,000,000 shares
of common stock of Norton, to Bauer in exchange for $100,000 in cash and 5% of
the post-acquisition shares. As a result, Waywood and Comp Hotel received
150,000 and 850,000 shares, respectively, of our common stock. The numbers of
shares they received were proportionate to the respective numbers of shares they
originally owned in Norton Industries Corp.

Waywood Investment Ltd. ("Waywood") is the sole promoter of our predecessor,
Norton Industries Corp ("Norton"). Waywood is a small business consulting firm
incorporated in the British Virgin Islands. Jianjun Zhang is the sole
shareholder of Waywood. From inception of Norton until the reverse merger of
Norton on January 30, 2005, Mr. Zhang was the sole director and executive
officer of Norton. On February 26, 2003, Waywood entered into a stock purchase
agreement with Comp Hotel International Ltd., a British Virgin Islands
corporation ("Comp Hotel"), pursuant to which Comp Hotel acquired 4,250,000
shares, or 85%, of Norton's common stock from Waywood in exchange for $42,500
in cash. Comp Hotel is a travel-related service provider operating in Hong Kong,
and is controlled by South Sea Petroleum Holdings Limited, a Hong Kong
corporation, whose principal business is the exploration and production of crude
oil in Indonesia. Immediately prior to the date of reverse merger between Bauer
Invest and Norton Industries Corp., Comp Hotel, owned 85%, and Waywood owned
15%, of Norton's issued and outstanding shares, respectively.

In connection with issuance of additional common shares as a result of capital
increase in our subsidiary, pursuant to a no-dilution clause of the Share
Exchange Agreement dated January 30, 2005, on September 21, 2005, we issued
212,500 and 37,500 shares of our common stock to Comp Hotel and Waywood,
respectively.


Related Party Loans
-------------------

Set forth below is a chart of all related party loans (lines of credit) extended
to us as of December 31, 2006:
<TABLE>
<CAPTION>

             Party                           Current Loan Balance         Date
-----------------------------------------------------------------------------------

                                           <c>                   <c>
Dahua Project Management Group                 $         935,979        October 2001
Dahua Designation Institute                              576,620      September 2003
Beijing Dahua Guohong Invest Inc.                         70,476       November 2002
Beijing Guohong Dahua Economic Research Center           271,652      September 2002
Beijing Dahua Bidding Agency                             550,992       November 2004
Donghui Du                                                 6,800       December 2001
Beijing Dahua Weiye Invest Inc.                           45,942       December 2005
------------------------------------------------------------------------------------
                       Total                   $       2,458,461

</TABLE>

All the related parties set forth above are parties in which Mr. Yonglin Du, our
president and CEO, holds an executive position. Donghui Du is Mr. Yongling Du's
son.

We entered a written loan agreement with Dahua Project Management Group. Please
see Exhibit 10. 6.  All other loans or lines of credit are extended based on
verbal agreements. All the loans so borrowed are unsecured. The money we borrow
from them bears interest at an annual rate of 6%, then prevailing market rate,
repayable within 30 days upon demand by lender.


Transaction With Guohong Dahua Economic Research Center
-------------------------------------------------------

For the past three years, we have contracted with Beijing Guohong Dahua Economic
Research Center, a related party, to provide us with administrative and
management services. Included in those services are the payment of officer
salaries and provision of office space and other shared costs and services. We
accrued $145,103 and $74,349 for each year ending December 31, 2004 and 2003
respectively into short- term loans due to related parties for payment of the
services. The agreements were filed as Exhibits 10.7 and 10.8.


Item 13.  Exhibits


(a) The following exhibits are filed as part of this report.

   Exhibit
   Number                        Description
 ---------     ----------------------------------------------------------------
    2.1       Share Exchange Agreement dated January 30, 2005 between Norton
              Industries Corp. and Bauer Invest, Inc. (Incorporated by reference
              to Current Report on Form 8-K filed on February 1, 2005,
              Commission File No. 0-49852).

    2.2       Share Exchange Agreement dated January 26, 2003 between Norton
              Industries Corp. and Comp Hotel International Ltd. (Incorporated
              by reference to Registration Statement on Form SB-2/A filed on
              November 14, 2005, Commission File No. 333-122622).

    2.3       Share Transfer Agreement dated May 25, 2004 between Bauer Invest,
              Inc. and Dahua Project Management Group Co., Ltd. (Incorporated by
              reference to Registration Statement on Form SB-2/A filed on
              November 14, 2005, Commission File 333-122622).

    3.1       Articles of Incorporation (Incorporated by reference to
              Registration Statement on Form 10-SB filed on June 10, 2002,
              Commission File No. 0-49852).

    3.2       Certificate of Amendment of Articles of Incorporation
              (Incorporated by reference to Registration Statement on Form SB-2
              filed on February 8, 2005, Commission File No. 333-122622).

    3.3       Bylaws (Incorporated by reference to Registration Statement on
              Form 10-SB filed on June 10, 2002 Commission File No. 0-49852).

    4.1       Specimen Stock Certificate (Incorporated by reference to
              Registration Statement on Form 10-SB/A filed on July 29, 2002,
              Commission File No. 0-49852).

   10.1       Land Use Rights Transfer Agreement (Incorporated by reference to
              Registration Statement on Form SB-2/A filed on November 14, 2005,
              Commission File No. 333-122622)

   10.2       Agreement dated September 24, 2003, between Beijing Dahua Real
              Estate and Aocheng Construction Management Ltd. (Incorporated by
              reference to Registration Statement on Form SB-2/A filed on
              November 14, 2005, Commission File No. 333-122622)

   10.3       National Land Use Permit issued on October 20, 2003 (Incorporated
              by reference to Registration Statement on Form SB-2/A filed on
              November 14, 2005, Commission File No. 333-122622)

   10.4       Development Planning Permit issued on September 4, 2003
              (Incorporated by reference to Registration Statement on Form
              SB-2/A filed on November 14, 2005, Commission File No. 333-122622)

   10.5       Development Construction Permit issued on September 28, 2003
              (Incorporated by reference to Registration Statement on Form
              SB-2/A filed on November 14, 2005, Commission File
              No. 333-122622).

   10.6       Line of Credit Agreement between Beijing Dahua Real Estate and
              Dahua Project Management Group (Incorporated by reference to
              Registration Statement on Form SB-2/A filed on November 14, 2005,
              Commission File No. 333-122622).

   10.7	  Agreement between Beijing Dahua Real Estate Development Ltd. and
              Beijing Dahua Gonghong Economic Research Center dated June 18,
              2003 (Incorporated by reference to Registration Statement on Form
              SB-2/A filed on March 8, 2006, Commission File No. 333-122622).

   10.8	  Agreement between Beijing Dahua Real Estate Development Ltd. and
              Beijing Dahua Gonghong Economic Research Center dated June 2004
              (Incorporated by reference to Registration Statement on Form
              SB-2/A filed on March 8, 2006, Commission File No. 333-122622).

   14.1       Code of Business Conduct and Ethics (Incorporated by reference to
              Registration Statement on Form SB-2 filed on February 8, 2005,
              Commission File No. 333-122622).

     21       Subsidiaries of the Registrant (Incorporated by reference to
              Registration Statement on Form SB-2/A filed on November 14, 2005,
              Commission File No. 333-122622).

   31.1       Rule 13a-14(a)/15d-14(a) Certification of Principal Executive
              Officer.

   31.2       Rule 13a-14(a)/15d-14(a) Certification of Principal Financial
              Officer.

   32.1       Section 1350 Certification of Principal Executive Officer.

   32.2       Section 1350 Certification of Princial Financial Officer.



Item 14   Principal Accountant Fees and Services


The following is a summary of the fees billed to us by our principal accountants
during the fiscal years ended December 31, 2006 and 2005:


   Fee category               2006                2005
----------------------   -------------    ---------------
Audit fees               $   40,000       $     28,500
Audit-related fees                -                  -
Tax fees                          -                  -
All other fees                    -                  -
-----------------------------------------------------------
      Total fees         $   40,000       $     28,500

Audit Fees consists of fees for professional services rendered by our principal
accountants for the audit of our annual financial statements or services that
are normally provided by our principal accountants in connection with statutory
and regulatory filings or engagements.

As of December 31, 2006, we did not have an audit committee. Our Board of
Directors reviewed and pre-approved all audit and non-audit services provided
by Child, Van Wagoner & Bradshaw, PLLC and has determined that the firm's
provision of such services to us during fiscal 2006 is compatible with and did
not impair the independence of Child, Van Wagoner & Bradshaw, PLLC. It is the
practice of our Board of Directors to consider and approve in advance all
auditing and non-auditing services provided to us by our independent auditors
in accordance with the applicable requirements of the Securities and Exchange
Commission.




                                    SIGNATURES


In accordance with Section 13 or 15(d) of the Exchange Act, the registrant has
duly caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.


DAHUA, INC.

Date: August 30, 2007



By: /s/ Yonglin Du
--------------------------
Yonglin Du, President and
Chief Executive Officer


In accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated:


/s/ Yonglin Du                                            August 30, 2007
 ---------------------------------------------          --------------------
Yonglin Du, President, Chief Executive Officer                  Date
and Director
(Principal Executive Officer)


/s/ Hua Meng                                               August 30, 2007
----------------------------------------------          --------------------
Hua Meng, Chief Financial Officer                               Date
(Principal Financial Officer and Principal
Accounting Officer)


/s/ Wulong Wang                                            August 30, 2007
----------------------------------------------          --------------------
Wulong Wang, Director                                            Date